Indian Railways taps World Bank for part of a $142-bn development fund

The World Bank and its private lending arm International Finance Corporation (IFC) will closely work with the Indian Railways to help it to create a Railway Development Fund that will partly finance the $142 billion investment plans for the core infrastructure sector announced by the government.

The World Bank group and the Indian Railways will work together to create a Railway Development Fund that will partly finance the $142 billion investment plans of the Railways over the next five years, says railway minister Suresh Prabhu.

''Our idea is to get part of this plan funded by multilateral bodies and the World Bank, that has global experience and access to technology, is a good partner,'' Prabhu said after a meeting with senior officials of the World Bank.

He said the size and nature of the fund was still under discussion and a formal announcement would follow soon. Prabhu said the World Bank was likely to work with global pension funds, among others, to raise money for the new fund.

During his two-day visit to the US capital, the minister attended a World Bank meeting on transportation, interacted with business leaders at the US-India Business Council (USIBC), met officials of the International Finance Corporation (IFC) and the US transportation secretary Anthony Renard Foxx.

''This fund would be kick started soon as there is unanimity in the World Bank leadership,'' the minister said.

Tapping private capital

He said the IFC could help Indian Railways to monetize its huge assets. ''Globally the railways get 30-40 per cent of their income from non-railway operations. In India it is not even two per cent,'' the minister said.

Putting the huge prime real estate held by Indian Railways into productive use would be the cornerstone of this strategy.

In various interactions, the minister encouraged US businesses to invest in Indian Railways that has been opened up to 100 per cent FDI in most part of its operations. USIBC president Mukesh Aghi said the new direction of the Indian Railways has enthused US companies.

''In less than two years, minister Prabhu has undertaken serious efforts to give a facelift to the Indian railways and revolutionise the way Indians travel, transport goods and services and conduct business,'' Aghi said.

Speaking at the plenary session of the World Bank conference on 'Transport and Cities: Key Drivers for Meeting Climate Goals', Prabhu highlighted the vital role of the Indian railways in providing low cost sustainable transportation.

The Indian Railways, he said, has embarked on transforming its energy mix by using renewable energy sources like solar and wind energy, and is undertaking energy audits to improve efficiency to meet its sustainability targets.

The minister underlined that any sustainable transport solution has to be economically viable, socially equitable and environment friendly. He advocated for a multi-model transportation policy to create an integrated transportation ecosystem where rail and road networks complement each other.

In his high level meetings with the World Bank and IFC officials, Prabhu discussed Indian Railways' efforts to expand, modernise, decentralise decision making, improve efficiency, meet customer expectations, move to clean energy, introduce greater transparency through e-tendering and change attitudes and mind sets.

He made a presentation on the railway sector to the senior leadership of the World Bank Group separately on the new initiatives of his ministry and how the World Bank could partner with Indian Railways.

Both the World Bank and IFC are working closely with Indian Railways to help it achieve its formidable targets.

The Indian railway minister met the US secretary of transportation Anthony Foxx to discuss enhanced bilateral engagement in the transportation sector flowing from the memorandum of cooperation signed in April 2015 during the visit of secretary Foxx to India.

Prabhu noted the immense possibilities for knowledge sharing, technology tie-ups and business cooperation between the two countries in the transportation sector. Both sides agreed to promote cooperation in a number of areas, including railway safety and capacity building, through joint workshops and exchange of visits.

In his meeting with the chairman and president of the US EXIM Bank Fred P Hochberg, Prabhu discussed the possibility of structuring an India specific financing model to take advantage of upcoming investment and business opportunities in India's rail sector. Both sides agreed to work on a road show of potential long-term investors having interest in India's infrastructure sector.

Prabhu also met with the president and CEO of the Overseas Private Investment Corporation (OPIC) Elizabeth L Littlefield to explore the possibility of OPIC's financing for the Indian Railways.

At a public event organised by the Carnegie Endowment for International Peace, the railway minister delivered a talk on `Modernizing India's Transportation Infrastructure for Sustained Growth: Challenges and Prospects'. He addressed a roundtable discussion organised by the American Enterprise Institute on India's Drive for Development'. In addition, he met a number of US businesses, think tanks, academics and Indian community leaders.

The US India Business Council organised a roundtable discussion with the Indian railway minister, focusing on investment opportunities for US businesses in India's railway sector. The minister informed that the Indian Railways has prepared a draft regulatory framework for transparency in fare and freight pricing, supporting public private partnerships and ensuring efficiency parameters in India's railway sector.

During the interaction, US companies offered their capabilities and expertise in sectors such as IT, manufacturing, research, finance, station development, etc.

During these interactions, the railway minister highlighted the Indian Railway's plans to invest $142 billion in the coming five years and hope to double this investment figure in the next five-year cycle. Since the last Railway Budget of 2015, the Indian Railways has implemented 110 reform measures, fulfilling all the announcements made in the budget, he said.

The Railways has permitted 100 per cent private sector investment in most segments of the railway infrastructure such as suburban rail, metro rail, locomotives and rolling stock, manufacturing and maintenance, signalling and electric works and dedicated freight lines.

Prabhu touched upon various projects, which are at different stages of implementation, including dedicated freight corridor, high speed train project, doubling/tripling train tracks in heavy traffic zones, modernisation of 400 railway stations, technological up-gradation of signal system, instrumentation and other safety measures.

He stressed that Indian Railways followed a completely transparent process in awarding the $7 billion contracts to GE and Alstom. He spoke about the huge investments coming from countries like Japan, which is helping India build its first bullet train with a highly concessional loan.

Indian Railways is also collaborating with several other countries, including the US. He encouraged US businesses to take advantage of the emerging opportunities.

Ptabhu had a useful interaction with members of the India Club and 1818 Society of the World Bank with participation of retired senior World Bank and IMF executives who have longstanding experience in working on various developmental projects globally, including infrastructure and transportation sectors.

The railway minister also interacted with the senior leadership of the World Resource Institute (WRI), during which he discussed the Indian Railways drive to transform its energy mix by promoting the use of clean energy and various initiatives to make railways an eco-friendly organisation.

He spoke about energy audits, use of LED lights, water recycling and other measures that are not only protecting the environment but also saving the government millions of dollars.