Indian Economy News

Railway minister invokes investment through PPP route

New Delhi: Rolling out the red carpet for the private sector, Suresh Prabhu, in his maiden Railway Budget, amalgamated public welfare with private investment. While investment through public-private partnerships (PPP) was increased to Rs 5,781 crore, several schemes for improving efficiency of the Railways were kept under this head.

"We will revamp the existing PPP cell in the ministry to make it more result-oriented. PPP will help in creating more jobs in the economy, besides augmenting capital improving for the Railways. We will partner the private sector to improve last-mile connectivity, expand our fleet of rolling stock and modernise our station infrastructure," said Prabhu in his speech in the Lok Sabha.

The minister also proposed to set up a public sector unit - Transport Logistics Corporation of India - to develop common user facilities with handling and value-added services to provide end-to-end logistics solution at select railway terminals. This, he said, would be through the PPP mode. Under this plan, in the initial period, 10 existing goods sheds of the Railways will be upgraded and 30 small multimodal logistic parks will be developed. These will be done on the surplus land.

"I expect to see the domestic private sector also getting more active in PPP projects once the revised policies take care of the existing concern areas. I liked the minister's proposal to monetise existing idle assets of the Railways instead of going for sale in order to generate additional resources," said Hemant Kanoria, chairman and managing director, Srei Infrastructure Finance Limited.

As part of the dedicated freight corridors (DFC) project, it will build feeder routes to connect the resource-rich areas with the main freight corridors. "Preliminary engineering-cum-traffic survey for four other DFCs is in progress and will be completed this year. We intend to explore the idea of construction of DFC feeder routes through private participation," said the minister.

The infrastructure sector is indeed delighted by the minister's enhanced focus on private investment. "The tapping of gross budgetary support for the Railways and recourse to market borrowing would help plough public investment in rail infrastructure, which in turn would help draw the private sector in rail operations," said Banmali Agrawala, Confederation of Indian Industry rail committee member and president & chief executive officer, GE South Asia.

Though missing finer details were a dampener for some investors, the comforting fact was invigorated focus on private investment. "The Budget lacks in fine detail but promises a superior ride to everyone from passengers to private participants with a slew of measures aimed at improving operational efficiencies and invigorating the PPP model and nodal agencies," said Ravi Uppal, managing director and group CEO, Jindal Steel & Power.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.