Railways asked to put Rs1,600 crore into freight corridor

Railways asked to put Rs1,600 crore into freight corridor

New Delhi: Even as the Indian Railways’ ratio of expenses to revenue has risen to its highest in recent years, the operating unit set up to build its marquee dedicated freight corridor has this month written to the national transporter, asking it to pump in around Rs1,600 crore in equity so that it can start work on two stretches of track on the eastern corridor.

This request comes at a time when the railways is already working on razor-thin margins. It has forecast an investible surplus of about Rs951 crore next year after meeting operational expenses.

An official with the Dedicated Freight Corridor Corporation of India Ltd (DFCCIL) said the organization had written to the railways asking it to choose between two stretches—Mughalsarai-Kanpur and Ludhiana-Khurja. He spoke on condition of anonymity.

The operating ratio, or the amount the transporter spends to earn every Rs100, deteriorated to 94.7% in 2009-10 from 90.5% in the previous year. This would have been worse if the railways had allocated money to the various funds as provisioned initially in this year’s Railway Budget.

The eastern corridor is one arm of an infrastructure project first conceived in 2005 by the United Progressive Alliance government during its first term.

It comprises two railway lines to transport goods and will connect India’s largest port in Mumbai to New Delhi through the western corridor (1,483km) and link Dankuni in West Bengal with Ludhiana in Punjab through the eastern freight corridor (1,806km). Other freight corridors connecting cities in the south are also being planned.

The railways has already tied up funding for the western corridor, with the government approving a soft loan of Rs17,700 crore from Japan.

The agreement for the first tranche of about Rs4,422 crore was signed in Japan on Wednesday.

“It is a ticklish decision for them. They have to decide which to take up," said the official, adding that the company already had enough land for the section between Mughalsarai and Kanpur, both in Uttar Pradesh. It already has enough land to build a single line of track between Ludhiana and Khurja in Uttar Pradesh, he added.

A senior railway official, who also did not want to be named, said that while the request had not yet come to him, any finance requirements for the freight corridor project would be met on a priority basis.

He said that money that had been earmarked for some other project or purpose could be routed for this if required. “That sort of prioritization happens all the time," he said.

The DFCCIL executive said the railways would have to decide whether the project was a priority. The agency will acquire as much as 80% of the land needed for the project within the next six months, he said.