Railways looks to lay PPP track for new projects

New Delhi: The Indian Railways is planning to adopt the public-private partnership (PPP) model for developing new projects, officials said, as the state-run transporter looks to share costs of large-scale infrastructure projects.

The railways is proposing to build key projects including new commecial lines such as mineral corridors in the coming months on the PPP mode, an official said.

There is also a growing view in the government that drawing private investment into railways can free up resources that could be deployed on social sectors and other infrastructure development.



Capex Boost Expected in FY26 Budget
The shift in strategy follows a infrastructure review meeting attended by several ministries in which it was flagged that the railways needs to also consider PPP for infrastructure creation instead of solely relying on the engineering, procurement and construction mode. However, despite the proposed shift towards the PPP model, the Indian Railways is expected to get a major boost in capital expenditure in the FY26 budget over the Rs 2.62 lakh crore provided for this fiscal year. After making little headway in developing projects via the PPP mode, Railways exclusively funds its infrastructure development, runs freight trains, subsequently recovering the investments through levies on freight movement.

“New commercial lines will be developed on PPP,” a senior government official said, adding that sensitive decisions pertaining to fares and passenger movement will continue to fully rest with the Railway Board.

KEY CORRIDOR PROGRAMMES
The railways currently runs three major economic corridor programmes spanning energy (mainly coal), minerals, and cement movement. These are aimed at improving port connectivity and addressing high traffic density. The planned energy, mining, and cement rail corridors are estimated to cost more than Rs 5.25 lakh crore by 2031.

Around 114 port-rail connectivity projects worth Rs 1 lakh crore have been taken up under the Sagarmala programme. Out of these, 49 projects totalling Rs 26,385 crore have been completed and 65 projects are at various stages of completion as of March 2024. Budget 2024-25 has earmarked Rs 68,634.44 crore for new lines, gauge conversion and doubling, lower than Rs 73,734.57 crore in fiscal 2023-24. PPP corridors are expected to be modelled on Merry-Go-Round (MGR) networks already used for dedicated short haul freight such as from a coal mine to the Indian Railways network. Under this model, rail tracks are funded by the intended beneficiaries.

The railways handles operations and provides locomotives, wagons, brake-vans and other rolling stock. Earnings for the railways are linked to the number of rakes loaded per day and distance covered. In addition to railway tracks, vacant land adjacent to redeveloped railway stations will also be leased out. These initiatives are expected to improve passenger amenities such as hotels and shops.