By Cherian Thomas,Bloomberg
Kyoto: Indian Railways, Asia’s oldest network, plans to borrow $15 billion (Rs 6,082 crore) from commercial banks over the next five years to build new tracks, passenger cars and modernize stations, Railway Board Chairman J. P. Batra said.
The funding is part of the state-run network’s plan to spend as much as $56 billion by 2012 to meet rising demand for transportation in the world’s second-fastest growing major economy after China.
Goldman Sachs Group Inc. estimates India’s $854 billion economy will grow at an average 8% each year until 2020. That expansion will boost annual goods movement by 51% to 1100 million tons and passenger traffic by 31% to 8.4 billion a year by 2012, Batra said.
“We realize that such high growth would be difficult to sustain without adequate capacity augmentation,” Batra, the top bureaucrat in the Ministry of Railways, said in an interview in Kyoto on 6 May. “A number of major Japanese and European banks are keen to lend money to us.”
Batra said India’s finance ministry is in talks with Japan’s Ministry of Finance to arrange $4 billion of loans to finance a dedicated freight corridor in the South Asian nation. He didn’t name the banks with which Railways is negotiating for loans.
Indian Railways is building two freight tracks in the busiest routes of the country. The first will connect India’s financial capital Mumbai in the west, to Delhi in the north. The second track will run between Ludhiana in the north and Kolkata in the east. The first phase of the project involves 2700 kilometers at a cost of about $6.5 billion, Batra said.
Roads and Ports
The plan to refurbish the railways is part of Prime Minister Manmohan Singh’s plan to invest $320 billion by 2012 on improving the country’s roads, ports and other infrastructure, which are strained. Singh wants better utilities to encourage investment in factories, generate jobs and accelerate economic growth to eradicate poverty in the world’s second-most populous country.
The railroad, which has 1.4 million people on its payroll, plans to spend $7.7 billion in the current financial year ending on 31March on increasing capacity.
Batra said the railroad will rely on its surplus cash to make the investments. It earned a surplus of $4.5 billion in the year ended 31March and expects a surplus of $5 billion this year, he said.
“The major focus in the next five years will be on rolling stock such as the locomotives and passenger cars,” Batra said. The plans is to almost double the annual capacity to produce passenger cars and locomotives to 4500 and 700 respectively.
15 Million People
Indian Railways currently runs 11,000 trains a day, moving about 15 million people, or almost the combined population of New Zealand, Hong Kong and Singapore.
Still, the fastest train in India clocks a maximum speed of 140 kilometers per hour, half the pace of the quickest train in Japan.
East Japan Railway Co., Japan’s largest rail operator, is testing a new shinkansen, or bullet train, called the Fastech 360, which has a top speed of 360 kilometers an hour. There is no date set for its introduction and no decision has been made about whether to run it at top speed if introduced.
“We are starting feasibility studies to introduce high speed trains in India, covering a distance of 2800 kilometers,” Batra said. “This will involve a major participation from private companies.”
India was the first in Asia to get a passenger railway when British rulers opened a 21-mile track from Mumbai to Thane on 16 April 1853. The network now covers 63,000 kilometers.
Railways make up 2.3% of the country’s economy, which grew 9.2% in the year ended 31 March the fastest pace in almost two decades. Growth has averaged 8.6% in the past four years, the quickest expansion since the country’s independence in 1947.
India also needs to spend money to upgrade the network as the key railway tracks connecting the nation’s biggest cities are “saturated in most sections,” according to a May 2002 report by the railways.
As many as 2,500 people have died in rail accidents between 1960 and 2004, and as many as 6,830 trains have derailed in that period, according to the railways.