In a major financial boost to the cash-starved Indian Railways, State-run insurance major life Insurance Corporation (lIC) on Wednesday committed a whopping Rs1.5 lakh crore for the development of various Railway projects over the next five years.
The biggest-ever funding for the Railways will be made through bonds issued by various entities of the Indian Railways, such as IRFC (Indian Railways Finance Corporation), beginning next fiscal.
The two would also sign a five-year moratorium on interest and loan repayment. An MoU was signed on Wednesday between lIC and the Ministry of Railways in this regard, which Railway Minister Suresh Prabhu termed as a “marriage” between two major organisations of the country that would be a “win-win situation” for both of them. Finance Minister Arun Jaitley was also present in the meeting.
“This is the first step towards the Indian Railways becoming a profitable, commercially-viable organisation. It will also give us the opportunity to expand our operations,” said Prabhu.
The MoU comes a few days after the Railways approved FDI for two locomotive projects in Bihar which was pending for long. In his Rail Budget speech, Prabhu had announced envisaging an investment of Rs8.50 lakh crore in the Railways during the next five years.
For his part, Jaitley highlighted the need for improvement in the performance of Railways. “Railways have a long history. But their growth needs to be expanded. Railways have to run professionally. A train journey for passengers has to be a matter of comfort and delight. It can’t be a compulsion with no option. Therefore, the quality of Railways needs to be hugely improved,” he said.
lIC will be subscribing to bonds worth Rs30,000 crore on an average every year over the next five years. “lIC has taken the task of supporting Indian Railways. It is a commercial decision. lIC will invest Rs1.5 lakh crore over a period of five years,” said Jaitley.
Terming the MoU as a significant step towards raising funds for Railway, Prabhu on a lighter note said, “People are always asking where is the moneyIJ So there is money, with honey because this is coming in at such a rate which is good for lIC and good for us.” lIC Chairman S K Roy was also present during the historic partnership.
later, in the Parliament, the Rail Minister informed the MPs about the MoU before the start of the general discussion over his rail budget in both the Houses. While speakers in lok Sabha, cutting across party lines, demanded more sops from the Railway Ministry for their constituencies, in Rajya Sabha the Rail budget faced severe criticism.
The Opposition parties criticized the government for “selling out” to corporate through PPP models and not announcing new trains, by revoking the custom. The ruling party MPs, however, hailed the Railway Budget as visionary and courageous and praised Prabhu for it.
“It is anti-people and visionless. The people have been deceived... There is no roadmap in the rail budget,” said Trinamool Congress member Kakoli Ghosh Dastidar. CPI (M) member M B Rajesh said the Railways needs bold steps to strengthen its public sector character as FDI and PPP investments do not materialise easily.
Yogi Adityanath (BJP) hailed the budget as visionary and suggested that the railway network should be extended to Nepal, Bhutan and other SAARC countries to meet Prime Minister Narendra Modi’s vision of intra-region connectivity.
In the Upper House, Mahendra Singh Mahra (Congress) said there were expectations from the Rail budget which it has not lived upto. He said the development of rail network was important also from the security point of view as the expansion of rail and road network by China had come up to the Indian border.
BJP’s Vijay Goel complimented the Railway Minister, saying he had presented a good budget. He said the country got a bold, practical and realistic budget after a very long time.
But Kanak lata Singh (SP) said farmers, workers and middle classes had been disappointed in the budget and there were no new announcements also. She said while there is talk for starting Bullet trains, the common people may find it difficult to afford high fares. Gulam Rasool Balyawi (JD-U) also said things like wi-fi or ordering food online may benefit only a small section of passengers who travel in trains.
later, in a separate event outside the House, Prabhu sought technical cooperation for upgradation of rail infrastructure with foreign countries. “We need partnership which is our thrust area which I have mentioned in my budget speech. Partnership can help railways grow faster,” Prabhu said at an international conference on railways organised by Assocham and attended by Ambassadors of China, France and Czech Republic.
He further said that railways would take help from the World Bank and other multi-lateral agencies like the Asian Development Bank (ADB) and the International Finance Corporation (IFC) for its expansion and modernisation plan.