Indian Railway plans Rs.850,000 crore investment in 5 years

The Railway Budget 2015-16, that left passenger and freight fares untouched, envisages an investment of Rs.850,000 crore over the next five years -- mostly directed towards modernizing existing tracks and introducing faster trains.

Railway Minister Suresh Prabhu Thursday told the Lok Sabha that the proportion of rail revenue available for investments would rise to 11.5 percent in the next fiscal -- up from 8.2 percent in the current fiscal.

The latest rail budget comes at a time when its finances and efficiency are, perhaps, at their worst - as measured by a common parameter, the operating ratio. It suggests how much money is spent on day-to-day operations to earn the revenues, giving an indication of the funds left for safety and expansion.

This ratio for Indian Railways declined to an unsustainable level of over 90 percent in 2010-11 from around 80 percent in the 1950s. Globally, a figure of 75-80 percent or lower is what is seen as a healthy benchmark, but India ranks among the worst networks on this count.

Prabhu Thursday proposed an operating ratio at 88.5 percent as against the targeted ratio of 92.5 percent for 2014-15, which has actually improved to 91.8 percent.

"This (proposed) operating ratio will be the best in nine years," Prabhu told parliament.

He has said the railways need $100 billion or Rs.600,000 crore in funding over the next three to four years.

"Budgetary support is the easiest way," Prabhu said adding, however, that the finance minister due to present the government's first full budget on Saturday has his own constraints in the matter.

The railways expect to get around Rs.50,000 as budgetary support from the government, while the rest has to come from external sources of funding and public-private participation.

"We'll tap other sources. Multilateral development banks and pension funds have shown keen interest in investing in the Indian Railways," Prabhu said on organisational plans to leverage finance.