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FDI only for infrastructure, not train operations

July 08, 2014 19:57 IST

Scouting for resources to meet its fund crunch, Railways is open to the idea of even 100 per cent FDI in its infrastructure development but would keep train operations out of its ambit.

"We have given our suggestion to the Cabinet and they have to take a call on what shall be the percentage...we would not mind having it up to the extent of 100 per cent but FDI would not be allowed in train operations", Railway Board Chairman Arunendra Kumar said.

The rail budget presented on Tuesday in parliament proposed to attract private domestic and FDI in infrastructure projects and pursuing private-public partnership to boost the finances of the railways.

Justifying the FDI proposal, both Railway Minister D V Sadananda Gowda and Kumar said there was a need for huge investment to run high speed trains and manage other projects including the upcoming dedicated freight corridors.

The Minister said said the Cabinet has to take a call and then "we will discuss it with the Prime Minister and Cabinet colleagues before taking a decision".

Admitting that PPP in railway sector takes a long time, Kumar said that as against the target of Rs 6,000 crore (Rs 60 billion), Railways could get Rs 2,500 crore (Rs 25 billion).

He said lack of "convergence" was also an issue hampering flow of fund under PPP but now "we would like to hear them (private players) first as to where they would like to invest in Railways and then we would set our priorities".

Talking about Railways’ financial health, Kumar, in his post-budget briefing, blamed the increased working expenses and staff allowance for the deterioration of the operating ratio, which stood at 93.5 per cent as against 90 per cent in the interim budget.

He said Railways have to shell out Rs 27,000 crore (Rs 270 billion) on account of fuel expenses, Rs 52,000 under the staff expenses and Rs 28,000 crore (Rs 280 billion) to foot the pension bill. 

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