The Manila-based Asian Development Bank (ADB) will extend loans of up to $500 million to Indian Railway to help improve its services along some of the busiest freight and passenger transport routes. The investment would target various routes in Chhattisgarh, Orissa, Maharashtra, Karnataka and Andhra Pradesh, including the critical ‘Golden Quadrilateral’ corridor that connects Chennai, Kolkata, Mumbai and New Delhi.
The loan has a 25-year term, with a grace period of five years. The government of India will provide counterpart finance of over $644 million to cover the costs of the total program, estimated at over $1.1 billion.
Railways were first introduced to India in 1853. By 1947, the year of India’s independence, there were forty-two rail systems. In 1951 the systems were nationalised as one unit, becoming one of the largest networks in the world.
Many of these lines traverse large rural stretches in which a large number of people live below the poverty line. ADB will finance additional lines and the electrification of hundreds of kilometers of existing track, along with the installation of new signaling. ADB would also support accounting reforms to improve operational efficiency of the railways.
Indian Railway has 113,617 km (70,598 miles) of total track over a route of 63,974 km (39,752 mi) and 7,083 stations. It has the world’s fourth largest railway network after those of the United States, Russia and China. The railways carry over 30 million passengers and 2.8 million tons of freight daily. It is the world’s second largest commercial or utility employer, with more than 1.36 million employees. As for rolling stock, IR owns over 219,931 (freight) wagons, 51,030 coaches and 8,889 locomotives.
“This program will help deliver more energy efficient, safe, reliable, and environmentally friendly rail services along key high density routes,” said Hiroaki Yamaguchi, ADB Principal Transport Specialist. “This in turn will result in direct and indirect economic opportunities for about 21 million people in program areas, who will benefit from faster travel times, lower costs and improved links to markets, production centers and social service facilities.”
Railways are at the heart of India’s transport sector, carrying over 7 billion passengers and more than 800 million tons of freight in the fiscal year to March 2010. However, a lack of investment in new infrastructure and institutional constraints have seen services struggling to keep up with the rise in traffic. The Ministry of Railways will carry out the program which is due for completion by December 2018.