Title - Railways to offer sops to woo private investment

NEW DELHI: With projects worth Rs 1.45 lakh crore pending, the cash-strapped railways plans to offer incentives, including tax holidays, to attract private players to invest in pending socially desirable and strategically located projects.A parliamentary panel was recently informed that the railways will approach the finance ministry after formulating the proposal.The move is an attempt to make investments in socially desirable but economically unviable projects attractive under public-private-partnership (PPP) mode by offering tax incentives and concessions after the lukewarm response of private players in the sector.The state-run transporter is considering incentives such as tax holidays under the I-T Act, exemptions from central excise and custom duty on purchase of capital goods, relief from sales tax and VAT and relief from payment of octroi and entry tax.Parliament's railway convention committee has asked the railways to seriously examine the prospect of PPP in socially desirable projects in backward areas in consultation with the finance ministry."Most of the socially desirable projects have low financial returns in the short run, but yield high socio-economic dividends. The government has to support such projects," a railway official said.Faced with funds crunch and a large number of pending projects, railways has given priority to those projects in which state governments are sharing costs. States such as Karnataka, Andhra Pradesh, Madhya Pradesh, Chhattisgarh and Maharashtra have come forward to share the cost with railways to complete socially desirable projects.

As railways' internal resources are inadequate to fund these capital intensive projects, an inter-ministerial group with secretary of Planning Commission, chairman railway board and revenue secretary as its members has been formed to look into how socially desirable and backward connectivity projects are to be sanctioned and funded.

The parliamentary committee has recommended suitable funding mechanism for rail projects for development of backward areas while asking railways to carry out a fresh exercise to re-prioritize projects considering the available budget allocation as well as the need to complete as many projects as possible within a reasonable time period.

The committee found that because of the large number of ongoing projects, particularly under new lines and gauge conversion, the limited resources available get spread thinly, leading to a very long gestation period.

The panel observed the need to connect remote and backward areas through rail connectivity schemes to foster growth and fulfill the aspirations of the common man by providing much needed employment opportunities.