Railways secures Rs1.50 lakh crore funding from LIC. What next?
Railway Minister Prabhu can lend, lease excess properties for building up huge food, grain storage yards, near stations to help faster movement and delivery. This would reduce the dependence on FCI godowns and still bring in the much needed finance, as rent for Railways!
Railway Minister, Suresh Prabhu, should be congratulated for swiftly being able to obtain the required assistance of Rs1.50 lakh crore, spread over the next five years, to finance various projects for the development of Railways in the country. The memorandum of understanding (MoU) was signed by Rajalakshmi Ravi Kumar, Finance Commissioner of Railways with SK Roy, Chairman of LIC, in the presence of the both the Finance Minister Arun Jaitley and Railway Minister Suresh Prabhu.
It is expected, according to the press, that this assistance will be made available from 2015-16 fiscal year and will help Railways to fund part of the total plan budget of Rs10,011 crore for this year.
In a separate development, while speaking at the international conference organised by industry body Assocham, which was also attended by Ambassadors of China, France and the Czech Republic, Suresh Prabhu sought the assistance for technical cooperation and upgrading of Railways from foreign participants. He assured those present that the Ministry proposes to set up a special body to enhance partnership with private investors and raise the efficiency in implementing various rail projects. At the same time, he mentioned about the urgent need to develop the capacity to haul additional coal that would be mined now, as a sequel to the coal block auctions that are taking place right now. He mentioned that these auctions have generated substantial amounts of funds that would help to develop various projects in the country.
Additionally, he mentioned that to further upgrade infrastructure, the Railways would seek help from other organisations, such as the World Bank, Asian Development Bank (ADB) and the International Finance Corp (IFC). It would follow that the Railways themselves may go in for issuance of tax-free bonds.
It may be recalled, not long ago, the Coal Ministry itself had identified 50 Rail projects to ensure evacuation of coal from the mines. There is no doubt that some of these will be taken up, possibly, during this fiscal itself.
In the meantime, it would be necessary for Railway Minister Prabhu to review the working of so many organisations that form part of the Railway system. For example, Rites was established in 1974 (40 years) for consultancy services in transport, infrastructure related technologies; the Dedicated Freight Corridor Corporation of India (2006), Pipavav Railways Corporation (2001) for rail infrastructure services, besides the Railway Finance Corporation, the financing arm of the Railways. A study would indicate the changes that have to be made in the functioning of these organisations and duplications that may have occurred in some of them.
Organisations, like the Dedicated Corridors, now need to have fixed time frames for the jobs on hand as most of the projects have been delayed for one reason or another. It would be in the fitness of things that a study group be set up to look into the various organisations associated with Railway development in the country and then decide what steps should be taken to bring about improvement in the effective functioning of each set up.
Likewise, there are large tracts of "land banks" that Railways own. In order to utilize these most effectively and still be able to serve the country, Suresh Prabhu can lend, lease these for building up huge food, grain storage yards, in the vicinity of Railway stations that would help faster movement and delivery. At the same time, it would reduce the dependence on Food Corp of India (FCI), and still bring in the needed finance, as rent for Railways! This would be some food for thought, for Railway Minister Suresh Prabhu, who needs the funds to finance the railway projects!
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.