Indian Railways to be country's next eco-growth engine

Report states huge investment in sector expected to have a multiplier effect of 5.73% on country's GDP

The government's focus on developing and reforming the Indian Railways will help the national transporter emerge as the next growth engine for the country's economy over the next decade, a report stated.

Leading brokerage JM Financial has come out with its report 'Railways: Turning the Corner' focussing on Indian Railways.

The report stated that huge investment in the sector is expected to have a multiplier effect of 5.73% on the country's GDP.

The government is also working on a long-term structural reforms which will help transform the Railways from a government-led monopoly, the report stated.

Over the past one decade, the government has spent only 0.3-0.5% of its GDP as capital investments in the Railways, while the roads have been getting considerably higher allocations, it said.

This neglect is even clearer from the collections of the diesel cess authorised by the Central Road Fund Act. While the Railways gets only 12.5% of the total amount annually credited to the fund, roads get 50% of the share, the report further said.

It can be noted that Prime Minister Narendra Modi-led government had chosen the Railways as a big driver for country's growth with a capital investment of Rs 8.5 trillion over next five years, which is 3.3 times over the previous five years.

This is a clear break from the decades of under-investments in building physical infrastructure which led to lower capacity expansion.