The Cabinet has approved the Railways’ move to form joint ventures with State governments. Last week, it had entered into a memorandum of understanding (MoU) with Andhra Pradesh and Kerala.

An MoU broadly on these lines was also signed earlier with Odisha and Maharashtra. Calling the move a step towards “cooperative federalism”, the Railway Minister Suresh Prabhu had said that the Ministry had got commitments from 17 States for such joint ventures.

The Cabinet’s approval for this move would help in mobilising resources for infrastructure projects in States, said a release.

The joint ventures would be formed with equity participation of Railway Ministry and concerned States.

Paid-up capital Each joint venture would have an initial paid up capital of ₹100 crore based on the size of projects. The Railway Ministry’s initial paid-up capital will be limited to ₹50 crore for each State.

Further infusion of fund/equity for the purpose of the projects shall be done after approval of the project and its funding at the level of appropriate competent authority.

The joint ventures can also form project-specific SPVs with equity holding by other shareholders like banks, ports, public sector undertakings, mining companies etc. The exercise would ensure greater participation of States in implementation of railway projects both in terms of financial participation and decision making process, added the release.

This will also facilitate faster statutory approvals and land acquisition. Besides helping passengers, cement, steel and power plants would also get the necessary rail link for transporting raw material and finished products.

Related Topics
comment COMMENT NOW