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REFILE-UPDATE 1-Indian railways plans to borrow $10 bln in 2012/13

Source : REUTERS
Last Updated: Sat, Mar 24, 2012 20:08 hrs

(Fixes spelling in headline)

By Matthias Williams and Manoj Kumar

NEW DELHI, March 14 (Reuters) - India's railway ministry plans to borrow 500 billion rupees ($10.02 billion) from the market through the Indian Railway Finance Corporation (IRFC) in the 2012/13 fiscal year, Railway Minister Dinesh Trivedi said on Wednesday.

Speaking as he unveiled the ministry's budget to parliament, he also said India planned to invest $147 billion in the railways during the next five-year plan period that runs from 2012 to 2017.

The railway budget precedes the federal budget, to be presented in parliament by Finance Minister Pranab Mukherjee on Friday, which is expected to push fiscal consolidation amid slowing economic growth and high inflation.

India's railway network is one of the world's largest, but years of low investment and populist policies have crimped growth and hindered private investment in a sector seen as crucial to the country's economic expansion.

"There has been considerable criticism of Indian railways in regards to only partial implementation or sometimes no implementation of the recommendation of several committees set up in the past," Trivedi told parliament.

"We need to have a system that delivers," Trivedi said.

India planned to add 700 kilometres of new rail lines to its network in the fiscal year starting in April, Trivedi said.

Successive railway ministers have belonged to powerful regional allies of the ruling party in New Delhi, who have tended to subsidise passenger fares at the expense of freight traffic, making goods transport expensive and slow.

Passenger fares were last raised in the 2003/04 budget, a year before India's ruling Congress party won its first term in office. The refusal to raise fares has strained the ministry's finances, which in turn has crimped the amount of money available to lay new tracks and modernise signaling.

Clogged freight lines, slow delivery times and overcrowded ports have dented Indian companies' competitiveness and slowed the pace at which crucial commodities such as coal are transported -- further aggravating India's power shortages.

($1 = 49.9250 Indian rupees) (Reporting by Matthias Williams and Manoj Kumar; editing by Malini Menon and Tony Munroe)




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