ADB approves $500 million loan to Indian Railways

The Asian Development Bank (ADB) is extending loans of up to $500 million to help India improve rail services along some of its busiest freight and passenger transport routes.

The ADB Board of directors late last week approved a multitranche financing facility for the Railway Sector Investment Program. It will finance additional lines and the electrification of hundreds of kilometers of existing track, along with installing new signaling. ADB will also support accounting reforms to improve operational efficiency at Indian Railways.

The investment program will target busy freight and passenger routes in the states of Chhattisgarh, Orissa, Maharashtra, Karnataka and Andhra Pradesh, including the critical 'Golden Quadrilateral' corridor that connects Chennai, Kolkata, Mumbai and New Delhi.

Many of the lines carry large number of passengers and large quantities of minerals and other economically important freight. They also traverse rural areas where large numbers of people live below the official poverty line.

''This program will help deliver more energy efficient, safe, reliable, and environmentally friendly rail services along key high density routes,'' said Hiroaki Yamaguchi, ADB Principal Transport Specialist. ''This in turn will result in direct and indirect economic opportunities for about 21 million people in program areas who will benefit from faster travel times, lower costs and improved links to markets, production centers and social service facilities.''

Indian railways carried over 7 billion passengers and more than 800 million tons of freight in the fiscal year to March 2010. But due to lack of investment in new infrastructure and institutional constraints have seen services struggling to keep up with the rise in traffic.