The Hindu Business Line : Rlys asked to review project viability criteria

There is a need to review the basis on which the Railways decides the viability of projects, according to a recommendation by a Parliamentary panel. The Railways considers a project viable if it assures a 14 per cent return. However, only 17.5 per cent of the Railways' 240 ongoing projects are meeting the rate of return criteria.

Given the declining interest rate and low inflationary regime, the Railways need to review the definition of viability, the Standing Committee on Railways has said in its report.

It indicated that the rate of return criteria should be lowered or eased to ensure taking up of a larger number of projects.

Investment suggestions

As the Railways find it difficult to mobilise adequate resources through the normal course of budgetary support for ongoing projects which have a huge throw forward of more than Rs 47,000 crore, the committee also suggested investment through joint ventures of public sector units and the State governments participation.

The committee added that this way the Railways would be able to meet its obligation of socio-economic development of backward regions by ensuring adequate funds for execution of ongoing projects in these areas and leaving bankable projects exclusively under Rail Vikas Nigam Ltd (RVNL) for implementation and execution.

The existing criteria of 14 per cent rate of return for deciding viability should be reviewed at the earliest, the committee said.

The Railways, on its part, pointed out that only about 50 per cent of the total Plan Expenditure of IR, which was Rs 15,000 crore for 2005-06, gets Budgetary support from the Union Government.

The balance is funded by internally generated surplus and other market borrowings. .