Home Ministry has raised objections in allowing Foreign Direct Investment (FDI) in highly- sensitive areas of the Railways sector, citing that such a move may compromise security of the country's largest transportation network. The red flag was raised by the home ministry after Commerce and Industry Ministry circulated a draft cabinet note for inter-ministerial consultations proposing 100% FDI in areas such as high-speed train systems and dedicated freight lines.
The proposal of allowing 100% FDI in Railways sector was originally mooted by Department of Industrial Policy and Promotion (DIPP) under the Commerce and Industry Ministry, which believed that such a move would definitely help the cash starved railways sector to grow.
According to Commerce Ministry, Railways sector is an imperative sector for driving India’s economic growth and has potential of lifting the GDP by over a percent. But, as per Home Ministry, FDI should not be allowed in highly sensitive parts of the railways as managing passengers and freight traffic and operations of trains is considered to be the most sensitive parts of the Indian Railways and by allowing FDI the country will be comprising on the security of its largest transportation network.
NDA’s maiden Rail Budget to be presented on July 8 will aim at a complete revamp and to improve the health of the cash-strapped Indian Railways, the largest mode of mass transport in the country. After the bitter pill of 14.2 per cent increase in the passenger fair last month, the budget is expected to focus on innovation, modernization, efficiency, punctuality, cleanliness, increased role of private sector and services features.