Pitching for a greater share of private and foreign capital in the Railways, especially in the freight segment, a report has called for a clear policy framework to promote such investments in the sector.
ASSOCHAM said that "The government and the Railways should come up with a clear policy framework for promoting private sector investment and FDI. Public private participation, currently being promoted in augmenting passenger services, should be extended to freight operations."
The report titled Re-imagining Railways-Giving a new life to the lifeline of the nation is prepared by private lender Yes Bank and industry lobby ASSOCHAM.
It said that besides, the Railways may also look at capitalizing on the existing rail infrastructure by creating a separate holding company, which would free up resources and provide additional capital for improving services.
According to the Railway Ministry, Railway modernization requires an investment of around INR 8.4 trillion in the next 5 years, of which INR 2.30 trillion are expected to be raised through PPPs.
Stating that equal opportunities should be created for attracting private sector, by sharing existing infrastructure, the report said PPPs can be taken forward by increasing the access to capital markets by floating bonds for financing projects for the Railways.
The report said that an investment of INR 8.4 trillion during the 12th Plan is required which includes INR 3.96 trillion for modernization, adding it is a quantum jump from investment levels of INR 2.03 trillion in the 11th Plan and INR 84,000 crore in the 10th Plan.
