Indian Railways’ testing borrowing limits, cost to double in 5 years


Indian Railways’ testing borrowing limits, cost to double in 5 years

The Indian Railways’ (IR) debt servicing costs are set to rise at a much faster clip starting FY21 and might more than double in five years from now as repayment obligations concerning Dedicated Freight Corridor Corporation of India (DFCCIL) and the proposed high-speed train network will kick in (see chart).

With its capacity expansion/asset replenishment projects already on a slow lane — against this fiscal’s capex budget of Rs 1.46 lakh crore, the sanctioned projects are worth over Rs 5 lakh crore —, the transporter is at the risk of a putting a freeze on new projects.

According to official sources, as the railway ministry raised this issue with the finance ministry recently, and asked for a 40% increase in this year’s (FY19) gross budgetary support (GBS) from the budgeted level of Rs 53,060 crore, the latter has instead asked the IR to borrow the extra amount and promised that it would pay up the principal part of the loan as and when the repayment begins. Read More

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