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Railways’ slow-track progress jeopardizes $50 billion FDI

Railways’ slow-track progress jeopardizes $50 billion FDI
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First Published: Wed, Jun 06 2007. 12 25 AM IST
Updated: Wed, Jun 06 2007. 12 25 AM IST
The delay by the Indian Railways in implementing the dedicated freight corridor it announced two years ago, could jeopardize the larger project that it is part of—an industrial corridor on either side of the tracks—and a proposed $50 billion (Rs2 trillion) in foreign direct investment (FDI), the bulk of it from Japan, that will be used to develop this.
The industrial corridor was proposed to go across Haryana, Delhi, Uttar Pradesh, Rajasthan, Gujarat and Maharashtra. Apart from the freight corridor, it was to have three ports and a 4,000MW power plant to service the industrial clusters. “Without the railway corridor, the industrial corridor cannot be set up. It is the core of the project,” says Naoyoshi Noguchi, director general of Japan External Trade Organization.
However, Noguchi declined to provide details, saying that the issue was under discussion with the Union government.
The dedicated freight corridor, which required an investment of Rs28,000 crore, was envisaged as the biggest infrastructure project handled by the railways.
The railway minister had announced plans for this two years ago, but the special purpose vehicle (SPV) that would implement the project, Dedicated Freight Corridor Corp. (DFCC), was only created last year. Now, the railways is yet to finalize the board of the SPV. Given this delay, experts have begun to doubt whether the Indian Railways will be able to execute the corridor project within the stipulated five years.
Railway ministry officials, when contacted, maintained that the delay was not something special to this case, but was true for mega infrastructure projects in general.
“At the initial stage all projects take time to begin rolling and even the Delhi Metro had faced a similar problem. Usually, the reason for delay is lack of funds or expertise. But in this case, the funds have already been arranged and we have the expertise. I am sure the project can be finished within five years,” said Prakash, general manager (Northern Railways), who was till last week, the adviser (infrastructure) at the Railway Board, the apex management entity within the Indian Railways, and part of the team in charge of the freight corridor project.
According to ministry officials who did not wish to be identified, the board of the SPV is close to being set up with the search committee having identified officers to head the organization.
They added that the delay in appointing officers to the board was caused by problems within the Railway Board, with its members, past and current, jockeying for the key posts on the board of DFCC.
Failure to get the freight corridor up and running in time will also have an impact on the proposed industrial corridor. The Mumbai-Delhi Industrial Corridor was to include hundreds of automobile, hardware and other companies.
The government had said that the industrial corridor project would double employment potential in India, triple industrial output and quadruple exports from the regions covered by the project in five years.
Some of the states involved, such as ?Rajasthan,?have earmarked land parcels for prospective Japanese manufacturers, but there has been little progress on the freight corridor itself.
Meanwhile, the final alignment of the dedicated freight corridor is yet to be approved by the Union cabinet and even a contract for appointment of consultants for the project has been awaiting clearance for the past 10 months.
“We are quite worried about the pace at which the railways is working on the dedicated freight corridor project. It can hamper the setting up of the industrial corridor,” says a technocrat associated with the industrial corridor project who did not wish to be identified.
According to a former railway officer who also requested anonymity, the very structure of the relationship between the railways and the new corporation could also delay completion of the project. “The DFCC’s board will have to keep going to the railway ministry for approvals on every issue, from the issue of tenders to engineering issues and there could be conflicts galore.”
The project should ideally have been taken up as a public-private partnership with the railways only playing a supervisory role, he added.
“The biggest problem is that unlike the Delhi Metro, this project—which is perhaps even more important—does not have a giant personality like E. Sreedharan (managing director of the Delhi Metro Rail Corp.) heading the project. And therefore, it will be very difficult for the new board to take bold decisions,” says another official at the railway ministry who did not wish to be identified.
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First Published: Wed, Jun 06 2007. 12 25 AM IST