Railways Plans to Pour Rs 8.6 Lakh Crore for New Tracks, Faster Trains and Station Revamp

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Indian Railways plans to rack up debt to help fund an unprecedented modernization plan.

Some Rs 2.5 lakh crore ($37 billion) of debt is required in the five years through 2020, according to Railway Minister Suresh Prabhu. That's more than triple the Rs 692 billion of outstanding Indian Railway Finance Corp. bonds. The network is also exploring non-fare revenue streams from advertising and land holdings, Prabhu said

"Very soon we'd go out to the market to open up advertising and branding on most of our trains and stations," Prabhu said in e-mailed replies to questions. "Indian Railways has various land banks which we are looking to monetize through long-term leases and other commercial development."

The world's fourth-largest railroad aims to pour Rs 8.6 lakh crore into new tracks, faster trains and station redevelopment to drag a network with roots in British colonial rule into the 21st century. Indian Railways carries about as many passengers daily as Australia's population, even as congestion and aging rolling stock slow speeds.

Prime Minister Narendra Modi's administration is relying on government spending and debt for the bulk of the five-year upgrade. Roughly 1 trillion rupees is expected to come from the private sector, according to Prabhu.

Some projects, such as a $15 billion bullet train due to start operations in 2023, have funding options in place. But questions remain over India's ability to find all the money needed for other railway improvements and to deliver projects on time.

SOURCE:The Economic Time

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