Rail upgrade to add over 2% to country’s GDP growth: Prabhu

The ongoing modernisation of Indian Railways, involving a capital expenditure of over Rs100,000 crore in the current fiscal alone, could boost the country's gross domestic product by about 2-2.5 per cent over a period of time, railway minister Suresh Prabhu said.

The railway minister was addressing the annual general meeting of industry chamber Assocham.

The capex plans of the railways included Rs82,000 crore earmarked for a Dedicated Freight Corridor project, Prabhu said.

Besides, he said, the Railways' capex includes a Rs40,000 crore order to General Electric Co (GE) and Alstom to set up locomotive factories in Bihar.

The railway ministry is also planning to redevelop 400 stations through open bids called the Swiss Challenge method, a form of public procurement.

Other proposals include port connectivity projects, he said, adding that the ministry was also planning to use revenue from clients such as Steel Authority of India and Coal India on coal evacuation projects.

The ministry is also discussing the creation of a $30 billion fund with the World Bank to finance key rail projects.

He said the railway ministry is on track to spend Rs100,000 crore as budgeted this fiscal, adding that about 103 announcements made in the FY16 railway budget have been implemented so far.

The minister pointed out that the projects were being awarded in a transparent manner and ''not a single rupee tender comes to the minister.'' Also, he said, funds are being raised at an affordable rate from the LIC ''which is just above the G-Sec rate paid in 30 years.''

"With 1.3 million employees, the Railways is also putting in place a transparent transfer and posting policy along with a fair system of recruitment. The government's Digital India programme is being used by the Railways in providing e-catering with new facilities like base kitchens being created, Prabhu said.

Prabhu said the railway ministry is trying to frame a regulatory system.

Raising money for investment has not been a problem even though the Railways needed a massive resources, he said.

"Money has been raised from the Life Insurance Corporation at a rate cheaper than the G-Secs", the minister said.

He said if things go as planned for the capex spend and boosting the Railway activity, this alone could contribute between two and 2.5 per cent to the country's GDP.