After remaining elusive about FDI in Railways, the Centre on Tuesday announced it will seek the Cabinet’s approval to relax the policy to overcome severe cash crunch.
In another step to attract funds for the cash-starved Railways, structural reforms will be introduced and resources will be mobilised through PSU surplus and PPP besides the FDI.The Commerce and Industry Ministry has already circulated a draft Cabinet note for inter-ministerial consultations on FDI in Railways. It has proposed to permit FDI in high-speed train systems, sub-urban corridors and freight lines connecting ports, mines and power installations.
While presenting the Railway Budget, Railways Minister DV Sadananda Gowda said the Government would mobilise resources to fund different infrastructure projects. “Growth of Railway sector depends heavily on availability of funds for investment in rail infrastructure. Internal revenue sources and Government funding are insufficient to meet the requirement. Hence, the Ministry of Railways is seeking Cabinet approval to allow FDI in Rail Sector,” Gowda said. However, at the same time he clarified that FDI would not be permitted in rail operations.
“Railways will interact with industry and take further steps to attract investment under PPP through BOT and Annuity route and 8 to 10 capacity augmentation projects on congested routes will be identified for this purpose,” he said. Zonal Railways will be suitably empowered to finalise and execute such projects, he added.
The Minister said with a large backlog of sanctioned projects, funding continues to be the biggest challenge for the Railways. He said while private investment and customer funding for some port connectivity projects and few other power sector projects has started, much more needs to happen if infrastructure creation has to keep pace with the requirement.
Railways has taken up port connectivity on priority through PPP mode of funding in tandem with Sagar Mala Project of Port Development. So far in-principle approval has been granted for building rail connectivity to the Ports of Jaigarh, Dighi, Rewas, Hazira, Tuna, Dholera and Astranga under Participative Model Policy of Indian Railways, amounting to a total cost of over Rs 4,000 crore.