Fiscal viability no longer sole criterion for rail projects

29 Nov 2022 CW Team

Since enlarging rail connectivity to far-flung, backward and hilly areas may not be financially viable, the government has decided to give weightage to “intangible benefits” like social, environmental and network effects of such projects.

The policy change will help the government to justify connectivity projects of new lines, gauge conversion, doubling of lines, etc, even if they do not generate financial returns. The Railways will now not have to struggle to obtain financial sanction for these projects.

The Ministry of Railways has sent a set of four new project proposals for appraisal to the Niti Aayog, justifying their investment based on this new ‘Modified Economic Internal Rate of Return’ model. These are: 30 km Kalyan-Murbad new line, 300 km Jalna-Jalgaon new line doubling of 98 km Ankai-Aurangabad (all three in Maharashtra); and the 100 km Sabarmati-Sarkhej-Dholera new line in Gujarat.

The Niti Aayog considers only projects which entail an investment of over Rs 500 crore. “Many more projects will be taken up on this concept in the future,” a Railway ministry spokesperson said. In the current financial year 2022-23, Railways has allocated Rs 670 billion for capital spend on new lines, gauge conversion and doubling of lines.

As per the toolkit devised by the Railway Ministry, the project assessment would have to answer questions like travel time savings, savings in reduced road stress, increased safety, savings in fuel overall for the country, savings in vehicle operating cost, savings accrued due to reduction in pollution and the like.

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