Cabinet approves formation of JV with states for rail projects

With a view to ensure greater participation of states, Union Cabinet today allowed the Railways to form Joint Venture companies with state governments to mobilize resources for speedy implementation of rail projects.
Keeping in mind the growing demands for railway lines in various states and huge requirement of funds to execute them, JV companies will be now responsible for identifying projects, land acquisition and possible financing in addition to government funding and also monitoring.
The Cabinet presided by Prime Minister Narendra Modi decided that the Joint Venture companies would be formed with equity participation of Ministry of Railways and concerned state governments.

Each Joint Venture (JV) would have an initial paid-up capital of Rs 100 crores based on the quantum of projects to be undertaken, a statement said.
Railways' initial paid-up capital will be limited to Rs 50 crore for each state. Further infusion of fund/equity for the purpose of the projects shall be done after approval of the project and its funding at the level of appropriate competent authority, the statement added.
The JV can also form project-specific SPVs with equity holding by other shareholders like banks, ports, public sector undertakings, mining companies.

The Joint Venture exercise would ensure greater participation of state governments in implementation of Railway projects, both in terms of financial participation as well as decision making process.

This will also facilitate faster statutory approvals and land acquisition. Besides transporting people, various cement, steel, power plants would get the necessary rail link for transportation of their raw material and finished products.
Railways has recently signed MoU with Kerala and Andhra governments for formation of JV companies to ensure faster implementation of rail projects in the respective states.
According to railways, it is always necessary to have partnership with state governments as it has been announced in the last Rail Budget.
Earlier, Odisha and Maharashtra had signed similar agreements with the railways to execute projects in their respective states.