India has one of the largest railway networks in the world. It is spread over 1,23,236 km, with 13,523 passenger trains and 9,146 freight trains, plying 23 million travelers’ and 3 million tonnes of freight ‘daily’ from 7,349 stations. These numbers are so big that you will have to read them twice to digest.
The size and reach of Indian Railways are enormous making it the largest Railway system in the world managed under single management. No wonder to manage this huge system you would need huge financial backing. And here comes IRFC (The Indian Railway Finance Corporation) into the picture. IRFC is the sole entity to finance the projects for Indian Railways.
We have already covered a detailed analysis of the company in our YouTube video:
Here we will see major steps taken by the Government in promoting Indian Railways during the year:
1) As a part of the Railways’ plans to upgrade its network, the Ministry announced that all non-AC sleeper coaches will be replaced by AC coaches for trains running >130 kmph. This move has been taken as a technical necessity for high-speed trains with the bonus of improving the passenger experience.
2) In the Railway Infrastructure space, the MoR has issued a policy to develop goods shed facility with an aim to augment the terminal capacity of Small Railway Stations through the participation of the Private Sector. Such facility to include goods wharf, utilities for laborers (resting space, drinking water, etc.), approach roads, loading and unloading docks, and other related infrastructure.
3) The Ministry of Railways (MoR) has decided to create a special cell to speed-up and increase the inflow of foreign direct investment.
4) It is also exploring the feasibility of seven new Bullet Train Projects on a PPP basis in addition to the existing Mumbai – Ahmedabad Bullet Train which is expected to be launched in 2022
These initiatives provide innumerable opportunities for IRFC going forward.
Let us also take a brief look at the developments in Indian Railways during the year:The lockdown phase was a very hard time around the globe. But to an extent, it was a blessing in disguise for Indian Railways as 8 major capacity enhancement projects were completed taking advantage of this lockdown. These projects included, 3 supercritical projects with a combined length of 68km, three critical projects with a combined length of 45km, an up-gradation project of the entire 389km railway line from Jhajha in Bihar to Pandit Deen Dayal Upadhyaya Junction in UP, and a new 82km port connectivity line to Paradip.
The Indian Railways announced the ‘Clone Train Scheme’ in September 2020, wherein an additional train carrying the same train number would run on routes having maximum waiting passengers.
October 2020 saw Indian Railways’ Rajdhani Express enter into speedy parcel transportation service by signing a deal with logistics partner of Amazon India. A specially designed high-speed parcel coach was added to the Rajdhani train under this arrangement.All these developments contributed to the rise of the lifeline named Indian Railways.
What does the future planning of Indian Railways hold for IRFC?
Railway Infrastructure is set to see an investment of Rs. 50 lakh crore (USD 715 billion) by 2030. As a primary step towards this projection, the Government has increased the scope of PPP beyond supportive roles. The government is now fetching public-private partnerships in the redevelopment of stations, building private freight terminals, and private container train operations.
Parallelly, even IRFC is planning to extend its financial support & expertise to railway PPP projects. A favorable credit rating and government backing place them in the front coach when it comes to affordable funding. Although this shall increase the risk of NPA, it can be countered by putting up an effective credit management system in place.Data Source: IBEF
Launch your Graphy