Indian Railways to amend Suburban Rail Policy after backlash from States

Under the proposed change, Indian Railways will share the loan guarantee for suburban projects, which was a state government responsibility so far. Now, feasibility studies will be taken up by Indian Railways under the new policy.

NEW DELHI: Indian Railways has decided to amend its Suburban Rail Systems 2017 policy following differences with various states, including Maharashtra and Karnataka.

Under the proposed change, Indian Railways will share the loan guarantee for suburban projects, which was a state government responsibility so far.

“The 2017 policy is under revision to address perceptions of the state governments and make it a 50:50 partnership in the true sense,” a railway official said on condition of anonymity. The amendments address most of the objections and bring state governments on board, said the official quoted above.

According to the 2017 policy, the development of suburban railways would be undertaken by a special purpose vehicle (SPV) that will have equal equity participation by the state government and Indian Railways. The total equity contribution in the project shall not exceed 40% of the capital cost, it said. The remaining cost of the project is to be arranged by the SPV through loan funds or any other source of funds, as decided by it, the policy said. Guarantees for the loans to be taken by the SPV shall be provided by the state government, according to the 2017 policy.

However, following the amendments, the guarantees would be shared by the Indian Railways and the state government.

“The 2017 policy had put the complete burden on state governments and we had raised an objection to this. Indian Railways needs to share the loan guarantee,” said a Maharashtra government official, who also did not wish to be identified.

Similarly, under the old policy, feasibility studies were the responsibility of the state government and were to be carried out at their cost. Now the feasibility studies will be taken up by Indian Railways and the costs are likely to be shared by the centre and Indian Railways on 50:50 basis.

Interestingly, the policy of 2017 was approved by railway minister Piyush Goyal independently while the amendments would go to the Union cabinet headed by Prime Minister Narendra Modi for clearance.

In February, finance minister Arun Jaitley, while presenting Union Budget 2018-19, had announced expansion of the Mumbai suburban train network at a cost of ₹51,000 crore. This includes ₹11,000 crore for adding 90km of double line track and an additional 150km of network at ₹40,000 crore. He also announced a corpus of ₹17,000 crore for a suburban rail network in Bengaluru.

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