The Indian Railways is fighting a grim battle to rescue its financially unviable projects as part of the state-run monolith’s commitment to ensure the execution of its social commitments. The railway ministry has now proposed raising funds through a cess and demanded that states contribute at least 50 per cent of the cost of these projects.

This assumes significance amidst Prime Minister Manmohan Singh expressing serious concerns over the tardy pace of railway projects.

During the course of an intense review of the railway projects in the Planning Commission recently, the ministry officials made it clear that of the 109 new line projects, only 12 are financially viable. “Some state governments are participating in these socio-economic projects, but the response is not encouraging. Only on 11 projects, the states have agreed to cooperate with resources of about Rs 2,700 crore. The allotment of matching funds for these projects is also an issue,” the ministry officials told in a presentation to the Deputy Chairman Planning Commission Montek Singh Ahluwalia.

They also pointed out that an outlay of Rs 1,500 crore per annum for provided for these lines are grossly inadequate even to meet the cost escalation and fresh resources would have to be mobilised for the same, they emphasised. They demanded that the reluctant states be categorically told to contribute at least 50 per cent of the cost of these projects and the Centre could actively consider raising funds through a cess or by any other means. When told to explore the possibility of securing funds from the markets, they argued, that financial institutions are also reluctant to fund these projects as they are economically unviable and are likely to sustain operational losses.

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