Annual investment in Railways has doubled since 2014, says Suresh Prabhu

“Indian Railways has been actively pursuing modernisation and expansion, and it has taken a number of reforms to improve transparency and efficiency, and the annual investment in Railways has doubled since 2014,” Union Minister of Railways Suresh Prabhu said in an interview to media, while also briefing at length on a number of topics including investments in the sector, private sector participation, various projects undertaken and the response Railways has received under the Make-in-India campaign.

When questioned about the status of the investments proposed in Indian Railways during 2016-2017, Railway Minister said that while Indian Railways has suffered because of under-investment which led to poor infrastructure growth in the rail sector for many decades, NDA government focused on improving investment in Railways with a view to create infrastructure and augment capacity. He said that Rs 1.5 lakh crore funding facility with LIC is secured and for projects, Railways have also taken loans from the World Bank, JICA and ADB. Railways also propose to set up a fund which will be structured with the assistance of the World Bank, wherein investments will be pooled from various investors for financing projects in the sector.

He said in mid-2015, Railways had finalised a medium-term investment plan of Rs 8.56 lakh crore and have considerably ramped up the investment made annually in Railways. The average investment between 2009 and 2014 was only about Rs 48,000 crore. As against the same, we achieved investments of Rs 93,000 crore and Rs 1.1 lakh crore in 2015-16 and 2016-17 respectively. In the current year, we propose to spend Rs 1.3 lakh crore, he added.

When asked about the key areas in which both private and public sector investment is expected, he said that Railways is very keen to engage with the private sector because of the efficiency of service delivery that they can bring into the Railways. A lot of work is outsourced, but Railways would like the private sector to come in and develop IR stations, goods sheds, logistic parks. Two loco factories are already being developed in the PPP (public-private partnership) mode and Railways hope to award one coach factory also through a similar process to the private sector. Railways have good success in the private freight terminals with 45 terminals having already been commissioned and now it has a target to take this number to 100.

“Indian Railways has taken up station redevelopment in a big way in PPP model. In fact, it launched one of the largest transit-oriented development programmes across the world worth Rs 100,000 crore,” he said. We have created a dedicated organisation for this purpose, namely Indian Railway Stations Development Corporation (IRSDC). Redevelopment of 400 stations will be done on e-bidding on “as is where is basis”; 12 stations have been handed over to IRSDC for redevelopment. Habibganj railway station in Bhopal has become the first railway station to be entrusted to a developer by a transparent bidding process. This station is under the management of the developer from March 1 this year. The work of redevelopment of Gandhinagar (Gujarat) railway station has started from January 9, 2017.

“Tenders for Anand Vihar, Bijwasan (Delhi) and Surat have been opened. 23 stations are to be bid out by this year. Out of these 23, 6 are in Maharashtra – Lokmanya Tilak Terminus, Pune, Thane, Mumbai Central, Bandra Terminus and Borivali. In the case of Pune, Bandra, Malaysian companies have expressed interest in bidding. It must be appreciated that station redevelopment process is a complex activity as it is to be undertaken even while the station is functional. Foreign countries have also expressed interest in the redevelopment of railway stations,” he said.

As regards the response from the global investors, especially under the Make-in-India campaign, he said that two loco factories are already being developed in Bihar under Make-in-India initiative. Electric and diesel locomotive factories at Madhepura and Marhowra have been awarded to Alstom and GE, respectively. These two projects would be one of the highest foreign direct investments in India amounting to order book of almost Rs 40,000 crore. The entire bid process has been conducted in a fair, transparent and competitive manner which has drawn international attention. Construction of both the factories and maintenance depots has been started and prototype locomotives are expected in 2018,” said Suresh Prabhu.

Under these two projects, some limited number of locomotives will be imported and a majority of locomotives will be manufactured in India itself. The contract provides suitable economic drivers which would ensure complete indigenisation of the manufacturing, which, in turn, will lead to a substantial development of ancillary manufacturing units and indigenisation of the locomotives, making it a true ‘Make in India’ proposition. The projects would also lead to the development of the region where the factory would be set up and also those where the maintenance facilities would be set up. In sum, the projects would bring in substantial development in these areas and also lead to the generation of direct and indirect employment.

With regard to engagement with state governments for their participation on Joint Venture model in the expansion of railways in different geographies, he said that Ministry of Railways (MoR) signed joint venture (JV) agreement for the formation of companies with nine state governments including Odisha, Kerala, Chhattisgarh, Haryana, Jharkhand, Gujarat, Madhya Pradesh, Andhra Pradesh and Maharashtra. So far, companies have been formed with four states, namely, Chhattisgarh, Gujarat, Kerala and Odisha. The formation of a company with Maharashtra is at advanced stages and will be concluded by next month. JVs would undertake project development works for an identified basket of projects, which will inter-alia include surveys, preparation of detailed project report (DPR) and getting requisite approvals, processing for sanctioning of identified projects and monitoring.

Union Minister for Railways said that the reforms being implemented in Indian Railways are unique and are being taken up for the first time after the independence. Powers were delegated and decentralised for improvement of efficiency and transparency with the effective implementation of e-tendering, e-auctioning, e-ticketing, e-governance, e-freight demand, e-catering, e-wheelchair, e-concierge.

Rail Development Authority (RDA) is being set up and it will act within the parameters of the Railway Act, 1989. RDA will determine tariff, ensure fair play and level playing field for stakeholder investment in railways, set up efficiency and performance standards and disseminate information on global best practices and benchmarking.

Besides, a web-enabled grievance redressal machinery (Nivaran) for both serving as well as retired railwaymen has been developed. An ERP (enterprise resource planning)-based human resource management system is proposed to be implemented all over Indian Railways and Rs 339.72 crore has been sanctioned for this purpose.

Indian Railways also commissioned 2,855 km of broad gauge (BG) lines, highest ever in 2016-17, which is 7.82 km per day. Our target is to increase BG line commissioning to 3,500 km in 2017-18 which means 9.6 km per day. He said that Railways intend to further increase the pace of rail line commissioning by keeping the target of 15 km a day in 2018-19 and then 20 km a day in 2019-20. “With state JVs coming into being, this pace will further accelerate substantially,” he added.

In case of DFCs, they are expected to be commissioned by 2019, he said, while elaborating that for both eastern and western DFCs, implementation schedules have been drawn up and are being monitored on a regular basis. These DFCs entail an investment of Rs 81,459 crore including land cost approved by the Cabinet Committee on Economic Affairs in June 2015. The cost for the project will be funded by a combination of debt from bilateral/multilateral agencies, equity from Ministry of Railways and public-private partnerships. The capital structure of Dedicated Freight Corridor Corporation of India (DFCCIL) will entail a debt-equity ratio of 3:1.

He further added that in his Budget Speech 2016-2017, he announced 3 new DFCs (i) East-West Corridor (2,328 km) (Kolkata-Mumbai), (ii) North-South Corridor (2,343 km) (Delhi-Chennai), and (iii) East Coast Corridor (1,114 km) (Kharagpur-Vijayawada) for which the studies are on.