Indian Railways has announced the rolling out of an ambitious infrastructure augmenting program with an outlay of Rs. 8 lakh crore for the coming 4 years. This is to reverse the trend of underinvestment that has been plaguing the railways.
Capital expenditure of the railways had surged form Rs 57,000 crores (2014-2015) to Rs 97,000 crores (2015-2016) and is expected to scale Rs 1.21 lakh crores in the current fiscal.
Facing under investment, the govt. has planned this massive program for plumbing in Rs. 8 lakh crore in the next four years. This enormous infrastructure program would consist of capacity augmentation, high speed rail connectivity and station redevelopment.
Senior railway officials announced that they are drawing up a concrete infrastructure development plan to utilize around Rs. 8.5 lakh crores in the next four years.
Officials were optimistic that modernization of this public sector giant will generate opportunities for economic growth by multiple times. A National Plan for Railway Infrastructure Development is being designed to include infrastructure projects for the coming years. It will help in expanding services like train berth availability.
The plan envisions that a part of the plan expenditure will come from capital expenditure component of the railway budget. But a major portion of the investment is being expected through PPP (Public Private Partnerships), multi-lateral funding and CSR (Corporate Social Responsibility) funds.
With regard to the huge opportunities in investing in this sector, railway officials said that, on one hand, the LIC (Life Insurance Corporation) will provide a loan of Rs 1 lakh crores for expansion of railways whereas, on the other, efforts are afoot to get aid from foreign countries.
At present, the railways has tie-ups with 13 countries for cooperating in the sector of railways. For instance, Railways has signed a deal with Japan, amounting to Rs 97636 crores for the sake of a high speed rail project in the Mumbai-Ahmadabad circuit.
Apart from the Mumbai- Ahmadabad circuit, railways is also making a plan to link all metros with high speed trains, called as the Diamond Quadrilateral project, which requires massive dose of investment for fast train availability.
With regard to station re-development, officials said that there was tremendous scope as over 408 major stations had been thrown open to attract participation by private sector.
The redevelopment program envisions vertical growth of stations by opening eateries, shopping malls, parking lots and much more. Online auctions are in the pipeline for opening up investment in stations for redevelopment projects.
Another option being explored by the railways is through private and public firms from their Social Responsibility Corpus (SRC). For the massive infrastructure program announced by the railways, the government plans to generate a part of the funds from CSR.
But the move to use CSR for improving railways is fraught with controversy. Some argue that Railways cannot use CSR as it is a commercial entity charging for its services and gaining profits. Others are of the opposite view and say that Railways can harness CSR for improving its services as the railways subsidizes most of its service to customers. While CSR is meant for non-profits, it can still be used for railways as it is a government subsidized service provider. Some also argue that this controversy is immaterial as CSR funds can barely make a dent in the massive fund for railways development.