Finance says no to 'unviable' railway projects

The finance ministry has put a spanner in railways minister Dinesh Trivedi’s proposal, to incorporate five projects involving the construction of 453.73 km of rail tracks at a cost of Rs 2,197.41 crore in the upcoming rail budget in March.

The finance ministry has put a spanner in railways minister Dinesh Trivedi’s proposal, to incorporate five projects involving the construction of 453.73 km of rail tracks at a cost of Rs 2,197.41 crore in the upcoming rail budget in March.



The finance ministry’s reservations are that, four of the five projects pitched by Trivedi have a negative or a low Rate of Return (ROR) and are, therefore, not financially viable.



"The finance ministry’s view is that — rather than announcing a slew of fresh projects — the railways minister must focus on completing the long-pending projects and prioritise investments in important areas.

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At its meeting on December 30 last, the expanded board on railways cleared proposals for construction of a 30 km new line from Hansdiha to Godda in Jharkhand at a cost of Rs 267.09 crore and the 68.61 km Rohtak-Meham-Hansi link in Haryana at a cost of Rs 406.87 crore. The two projects have a ROR of minus 13.25 and minus 5.60 respectively. RORs provide the ratio of each rupee earned against an expenditure of Rs 100.

The doubling projects cleared by the expanded board includes the 104.44 km link from Dhasa to Jetalsar at a cost of Rs 376.59 crore and the 170.48 km connectivity from Ahmedabad to Botad at a cost of Rs 567.18 crore — both in Gujarat, which have a ROR of 5.83 and 2.61 respectively.

Of the projects pitched, the 80 km long third line from Bhadrak to Nergundi in Andhra Pradesh (costing Rs 558.68 crores) has the best ROR figures: At 26.55.

At a meeting last week with officials of the ministries of finance, program implementation, planning commission, railways officials were asked to explain why the five projects being pitched were to be regarded as top priority works. “The railways are still struggling to find convincing answers,” top ministry sources said.

Five projects were cleared at the meeting of the expanded board for railways on December 30.

The 381 projects involving the construction of 41,171 km tracks at an astronomical cost of Rs 2,59,466 crore were pending til April 2011, official papers show.

At a series of inter-ministerial meetings the railways have been advised to keep “populist schemes” out of Trivedi’s upcoming budget speech.

“The focus, ought to be on prioritising the investment needs of the railways in areas such as the dedicated freight corridors, high speed rolling stock ...,” railways officials have been advised.