The Hindu Business Line : The right track

Expenditure on the rail freight corridor, especially with Japanese co-operation, would be well worth it as the project would bolster economic growth.

It is a reflection of its seriousness of purpose that the Japan International Co-operation Agency (JICA) has within 17 months submitted to Indian Railways the final study on the proposed Dedicated Freight Corridor (DFC). The project is ambitious, envisaging an expenditure of Rs 50,000 crore on two freight corridors connecting Delhi with Mumbai and Kolkata (Howrah). Japan’s Special Terms for Economic Partnership scheme is seen by both countries as an effective means for carrying out large-scale infrastructure projects in India. The decision to evaluate the DFC option arises from the realisation that rail transport for bulk freight requires separate railway lines with connectivity to ports and road transport, freight collection facilities and inland container depots. A DFC would also have the flexibility to bypass built-up areas and cities which could minimise the cost of land acquisition and the scale of resettlement of people living along the proposed tracks.

The final report bolsters the case for a DFC on financial grounds as well. A comparison of the total investment and maintenance and operation costs for 35 years with the total benefits during this period shows an internal rate of return of 13.95 per cent for the western corridor and 15.09 per cent for the eastern DFC. According to present norms, when this index is 12 per cent, the investment is judged feasible. The high IRR also indicates that the project would generate large economic benefits, including cutting the time taken between Delhi-Mumbai and Delhi-Sonanagar (West Bengal) by approximately one-third; and relocation of manufacturing plants and setting up of new ones along the route. The supporting business environment could, in turn, spur the development of core cities along the corridors, in the process creating employment opportunities to people who have remained out of the development loop because of poor connectivity.

There have been differences on the costing of the project between the Japanese agency and Indian Railways, the latter projecting it at Rs 28,000 crore, against Rs 50,000 crore estimated by JICA. This difference is said to be because JICA has included the cost of rolling stock and creation of electric traction facilities, particularly on the western corridor. The Railways estimate apparently does not include rolling stock as investment in container wagons is mostly done by the operators and not by the Government. So far, the extent of Japanese funding for the project has not been decided, but the Government would be better off with whatever leg up it can get from Japan. Given the magnitude of infrastructure development being planned in the country, Rs 50,000 crore should not be a daunting figure, especially since this project is a must if the growth story is to continue uninterrupted.

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