Railways Forms JV With States to Develop Railway Infrastructure

indian-railways1Ministry of Railways signed a Joint Venture Agreement with Government of Odisha for the formation of Joint Venture Company for development of Railway Infrastructure in the State. Aim of setting up the joint ventures with state governments is to focus project development, resource mobilization, land acquisition, project implementation and monitoring of critical rail projects in their respective state, is the part of budget announcement.

Due to rising demands of railway infrastructure in various states and huge requirement of funds to execute them, Railway Minister Mr. Suresh Prabhu came up with an idea in his railway budget to set up a JV Company, which will be fully owned by the government, in this JV company, state will have a 51 percent stake and 49 percent stake of Ministry of railway.

This JV Company will identify projects to be developed and find avenues for financing of the same. Ministry of Railways and Govt. of Odisha will be essentially funding part of such identified projects. Project specific special purpose vehicles (SPV) will be formed after financial closure of the project.

17 other state governments are keen to form JV Companies in collaboration with Ministry of Railways for the development of railway infrastructure in their respective states.
Seven State Governments viz. Odisha, Maharashtra, Chhattisgarh, Andhra Pradesh, Telangana, Kerala and Haryana have already signed MoUs with Ministry of Railways. Jharkhand and Gujarat have shown their interest to sign MoU/JV agreements.

Other States who have shown interest to form State JVs are Punjab, Bihar, West Bengal, Madhya Pradesh, Rajasthan, Tamil Nadu and Uttar Pradesh. Karnataka is already having a Joint Venture (by the name K-RIDE) with Ministry of Railways.

Railways have a large shelf of ongoing New Line, Gauge Conversion and Doubling projects needing about Rs 3.86 lakh crore to complete.

“Indian Railways has been playing a major role in national integration by connecting the remotest places and bringing people closer to each other. Railways receive a large number of demands for network expansion as a railway line acts as an engine of growth for the area it serves,” said the railway in a statement.

To speed up the projects, Railways have been trying to mobilize resources through other than Gross Budgetary Support.

Indian Railways have tied up funds for a critical capacity enhancement project of doubling, third line, electrification etc. This tied up loan will ensure dedicated and assured funding for such critical projects, said the railway.

Formation of JV Companies with the State Governments will help in faster commissioning of critical rail infrastructure projects, help in mobilization of funds and facilitate various clearances and land acquisition.

Source: Information has been obtained from India Railways press note.