Railways may land in debt trap if borrowing ignores profitability: minister
Union Railway Minister Nitish Kumar today called for defining the role of the railways in the transport sector so that the level of investment could be fixed to enable the railways and other modes of transport to fulfil their roles in the national economy.
Presenting a status paper on the Indian Railways, the first of its kind prepared by his ministry in the Lok Sabha, Kumar said it should be decided whether the transport sector in general and the railways in particular needed to align their respective growth strategies with the growth of the national economy. It should also be decided what the level of investment in the transport sector as a whole should be and also the level of investment in the railways.
Unless the overall cost of borrowed capital from the central exchequer as well as market borrowing were kept within the profitability level, the railways would fall into a debt trap like that of most of developed countries.
The Japanese and the German railways had to be bailed out of 28 trillion yen and 67 billion marks of debt through intervention by their respective governments.
Therefore, to avoid such a situation, a mechanism had to be developed to stimulate flow of private capital to the rail sector without correspondingly generating the intolerable burden of market borrowing, interest rates and unmanageable debt traps, he said.
Expressing concern over the 'crippling resource constraints', the
minister said the high-density network of the Indian
railways was ''totally saturated and needs massive doses of
investment in its basic infrastructure, particularly because future
growth is also projected by industry, trade and business interests
along these very corridors of the railways''.
The railways were more than six times energy-efficient than the
road transport, eco friendly and capable of using any form of primary
energy.
It had been estimated that, if financial inputs were consciously increased in favour of the railways, savings in diesel alone at the
present level of traffic would be Rs 53 billion in foreign exchange
annually, he said.
Referring to the subsidisation of passenger and freight traffic
amounting to Rs 280 billion in 1997-98, he said it might not be
feasible to remove these in a country where a substantial chunk of population is below the poverty line.
Referring to suburban train services, the minister said the government was committed to improving these and make investments in this sector.
UNI
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