Railways eye FDI, PPP for infrastructure projects

Indian Railways plans to tap private investment in rail infrastructure through domestic and foreign direct investment (FDI) as it needs huge funds for infrastructure development, which is the key to the development of the railway sector, railway minister Sadananda Gowda said while presenting the Rail Budget  2014-15 in Parliament today.

He said the ministry of railways is seeking cabinet approval to allow FDI in the rail sector as internal revenue sources and government funding are insufficient to meet the requirement.

He said there has been a lot of talk about public-private partnership for raising resources. Railways being a capital intensive sector have not been successful so far in raising substantial resources through PPP route.

''Bulk of our future projects will be financed through PPP model, including high-speed rail, which requires huge investments.''

Apart from mobilising resources, there is also a need to strategically manage other aspects of railway planning and administration, he said.

The railways plan to interact with industry and take other 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, he said.

Gowda said zonal railways will be suitably empowered to finalise and execute such projects. 

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 a few power sector projects has started, much more needs to happen if infrastructure creation has to keep pace with the requirement.

Gowda said the railways has taken up port connectivity on priority through PPP mode of funding in tandem with Sagar Mala Project of port development. The railways will facilitate connectivity to the new and upcoming ports through private participation. He said, 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 of over Rs4,000 crore.

At the same time, the minister said, the railway would also increasingly leverage its own resources and those of its associate PSUs that are financially sound and have been doing very well. As part of the plan, the railways propose to launch a scheme to bring in investible surplus funds of railway PSUs in infrastructure projects of Indian Railways, which can generate attractive returns for the PSUs.