In order to mobilize resources for undertaking various rail infrastructure projects in States, the Union Cabinet has approved formation of joint ventures companies between Indian railways and the state governments. The Cabinet chaired by Prime Minister Narendra Modi has decided that the joint venture companies would be formed with equity participation of ministry of railways and concerned state governments. Each joint venture would have an initial paid up capital of Rs 100 crore based on the size of projects. The Railway Ministry’s initial paid-up capital will be limited to Rs 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.
With a view of growing demands for railway lines in various states and huge requirement of funds to execute them, JV companies will be now responsible for identifying projects, land acquisition and possible financing in addition to government funding and also monitoring.
Joint venture further can also form project-specific SPVs with equity holding by other shareholders like banks, ports, public sector undertakings, mining companies etc. This move will ensure greater participation of States in implementation of railway projects both in terms of financial participation and decision making process. 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.
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