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Fault lines

Railway's planned capex of ₹1.2 trillion in FY17 comes on top of ₹2.1 trillion needed to complete existing projects 

Published 8 years ago on Apr 21, 2016 1 minute Read

Indian Railways (IR) is looking at Rs.1.2 trillion of capital expenditure in the current fiscal (FY17) towards the upgradation of infrastructure across the country. While the number appears humongous for the cash-strapped utility, which employs over 1.3 million people, a report by Nomura has pointed out that IR already has a large pipeline of nearly 2,000 projects that will require investments of over Rs.2.1 trillion to be completed. According to the report Reinvigoration of the Indian Railways, a majority of the backlog comprises network expansion projects. But what is revealing is that many of the new projects are not considered commercially viable, and previous railway committees had observed that some of these are based more on political considerations than economic rationale. In fact, the Bibek Debroy Committee has pointed out that projects worth Rs.30 billion are less than 10% complete and Rs.35 billion worth of new projects are less than 25% complete. But some of these unviable projects will have to be completed as they are already past the halfway mark. The only silver lining in this whole mess might be that the potential scrapping of uneconomical new railway lines might result in financial savings of Rs.65 billion. That’s not really small change.