In a major setback to the Railway ministry, its flagship Dedicated Freight Corridor (DFC) project failed to secure the final approval of Cabinet Committee on Economic Affairs (CCEA) which met on Monday evening. Instead, the CCEA accorded “in-principle” approval to the project. This, despite the fact that the project had already been granted an in-principle approval as early as February 2006.

But why would the CCEA approve something in-principle twice over? While Railway ministry officials insisted that the in-principle approval had indeed been granted a second time, sources in the Government said that the earlier in-principle nod had merely been extended since the CCEA declined to give it’s final approval to the project.

Top sources told The Indian Express that the Railway ministry had approached the CCEA with a proposal to secure a final clearance for the Rs 28,181 crore project. Already struggling to put the project on track owing to a variety of issues, the Railways are now in a rush to secure a final nod from the CCEA since the lack of such an approval means that the ministry cannot begin actual construction work on the project.

However, the CCEA is learnt to have expressed reservations on clearing the project, emphasising the need for more discussion and deliberations before clearing a mega-project of such huge dimensions. The main issue here, said sources, relates to the fact that Rail Bhavan has still not been able to formulate a business plan for the project. “A business plan is imperative since it will spell out how the Railways plan to earn revenues from the venture and pay back its loans,” said a senior official from the Planning Commission. “Otherwise, this project has the potential of turning into another of Railways’ many new line projects, which have no completion deadlines,” the official added. The Railways plan to raise a loan worth Rs 18,000 crore-20,000 crore from the Japan Bank of International Cooperation (JBIC) to fund the first phase of the project.

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