26Feb

Rail Budget 2015-16 India Update : Suresh Prabhu’s Speech (PART 10)

Mr. Suresh Prabhu’s Speech Continues…

H. Resource Mobilisation

91.Madam Speaker, IR today is resource-light. This is unsustainable. Let alone capital investment, there is not even enough for depreciation. Conventionally, we have looked for Gross Budgetary Support from the Union Government. But this is business as usual. This is neither viable nor necessary.

92.First, the Union government’s financial resources are themselves over-stretched. Second, internal generation of resources will pick up once the Railway reforms start, GDP growth occurs and the Railways begin to attract traffic that has moved elsewhere, especially to the road transport sector. Third, for remunerative projects, it should be possible to generate resources through market borrowings, routed through partnerships with Railway PSUs and IRFC. Fourth, there are several areas where resources can be generated through PPP. Fifth, moving away from debt, some projects can be equity-driven, through partnerships with State governments. All these lead to a simple proposition. One can leverage the resources one possesses better.

93.The size of the Plan Budget has gone up by 52% from Rs. 65,798 crore in 2014-15 to Rs. 1,00,011 crore in 2015-16. Support from the Central Government constitutes 41.6% of the total Plan Budget and Internal generation 17.8 %. In view of the fact that it would be a challenging task to initiate the mobilization of extra-budgetary resources, it is proposed to set up a Financing Cell in the Railway Board, which would seek the benefit of advice from experts in this field.

94.For financing remunerative projects through market borrowings, it is intended to tap low cost long term funds from insurance and pension funds, multi-lateral and bilateral agencies which can be serviced through incremental revenues. Railways will create new vehicles to crowd in investment from long-term institutional investors and other partners. These may include setting up an infrastructure fund, a holding company and a JV with an existing NBFC of a PSU with IRFC, for raising long term debt from domestic as well as overseas sources, including multilateral and bilateral financial institutions that have expressed keen interest in working closely with Railways in this endeavor. We will monetize our assets rather than sell them.

95.I wish to state that encroachment on Railway land is a serious issue. To counter this, digitized mapping of land records has been initiated and responsibility will be fixed on officials for any encroachments.

96.Madam Speaker, we are drawing up a comprehensive policy to tap the latent advertising potential. The new strategy would harness all avenues including offering stations and trains for corporate branding.

97.We are launching a Coastal Connectivity Program this year where Railways in partnership with the concerned ports will deliver rail connectivity to Nargol, Chharra, Dighi, Rewas and Tuna. This programme is expected to mobilize investments of approximately Rs 2000 crore.

98.We propose to launch projects worth Rs 2500 crore through BOT/ Annuity route. These include Wardha- Nagpur 3rd line, Kazipet-Vijaywada 3rd line, Bhadrak –Nargundi 3rd line and Bhuj- Nalia Gauge Conversion.

99.Scrap disposal policy of the Indian Railways will be reviewed for speedier scrap disposal.

Mr. Suresh Prabhu’s Speech Continues…

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