Indian Railways and Life Insurance Corporation of India have signed a landmark agreement on funding of railway projects.
Under this memorandum of understanding, LIC will make available to the Ministry of Railways and its entities financial assistance up to Rs.1.5 lakh crore over the next five years for implementing railway projects. The funding will be available from the financial year 2015-16.
Speaking on the occasion, Railway Minister Suresh Prabhu said this was the first such step in its endeavour to make Indian Railways prosperous in future, adding that the Ministry of Railways would be able to augment its resources for speedier execution of projects.
In his Railway Budget last month, Prabhu had announced his intention of meeting a part of the total plan budget of Rs.1,00,011 crore for 2015-16 through extra budgetary resources, such as market borrowings, by tapping low-cost long-term funds. “The challenge has been successfully met in a substantial measure by the signing of this MoU for mobilising resources,” he noted.
There would be a five-year moratorium on interest and loan repayment and the rest of the terms would be negotiated while signing the financial assistance agreement.
In a related development, the Ministry of Railways is approaching state governments to help develop railway infrastructure like stations, road under-bridges and road over-bridges, and laying additional railway lines. Such assistance is normally in the form of land acquisition, law and order, removal of encroachments, temporary closure of roads and shifting of utilities. The states will be asked to form special purpose vehicles jointly with the Ministry of Railways to facilitate speedier execution of ongoing and new projects.