Mumbai: Railway minister Suresh Prabhu on Friday asked foreign funds and domestic investors to replicate with the railways their success in the telecom, power and road sectors as the national transporter needs a whopping Rs 1 trillion in funds this year and Rs 8.5 trillion over the next five years.
"You have successfully invested in the telecom and power and roads sector, but never in the railways. The government also didn't invest during the past two decades and so we've chalked out a five-year plan under which we are looking at an investment of Rs 1 trillion this financial year and Rs 8.5 trillion over the next five years," Prabhu told a gathering of overseas investment bankers and domestic funds led by insurers and financial institutions.
The closed-door meeting at the BSE Tower in Mumbai on Friday evening, where Prabhu rolled out the red carpet for foreign funds and domestic investors, included multinational i-bankers, FIIs, domestic insurers like LIC and other financial institutions, sources said.
However, the minister was quick to admit that private investment in a public service like the railways will take time.
"We are looking at private sector investments, too, though we know it will take time," the minister was quoted as saying by one of the participants.
Most railway lines are running at 100 per cent of their capacity, leading to heavy congestion. Hence, investments are needed to ease rail traffic, he said, adding that it will cost Rs 10 crore for laying a 1-km rail link and Rs 6 crore for doubling/ tripling of an existing railhead.
Stating that most of the funds for railways come either from public institutions like LIC, which has committed to subscribe Rs 1.5-trillion worth of RFC bonds, or through budgetary support, Prabhu said that given the state of public finances, railways need large funds from the private sector.
Explaining the need for capital investment, the minister, who was praised for his radical reforms in the power sector during his tenure in the previous NDA ministry, said "for improving rail infrastructure we need to invest 10 per cent of the total infrastructure GDP of USD 2 trillion over next five years.
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