Indian Railways is in talks with Life Insurance Corporation of India (LIC) to devise a mechanism to deploy Rs.1 trillion (USD 161 bn) of its surplus funds into railway infrastructure over a period of five years, as part of a government plan to secure funds for improving and expanding the world’s fourth largest railway network, writes LiveMint.com.
Railway minister, Suresh Prabhu, is expected to sign an agreement for the same next weeks, according to people familiar with the development.
“LIC’s investment will be in the form of debt. The exact mechanism is being worked out,” said the source, requesting anonymity.
In the Railway Budget presented on 26 February, Prabhu had unveiled a plan that proposed an investment of Rs.8.5 trillion (USD 137 bn) into the railways over the next five years, sourcing part of the funds from financial institutions such as state-run LIC.
Indian Railways has already identified projects for funding by the financial institutions. “These projects are those which promise a good return on investment and hence will be attractive for investment by financial institutions. The cost of these projects is also broadly estimated to be around Rs.1 trillion,” the person said.
Finding funds to transform the nation’s decrepit railway network into an efficient and modern freight transporter is critical to Prime Minister Narendra Modi’s vision of making India a manufacturing hub and speeding up economic growth.