New Delhi: Life Insurance Corporation presented the cheque of Rs.2000 crore to Indian Railway Finance as the first tranche of funding assistance to Railways for its projects.
Suresh Prabhu pointed out that finding resources for investment in capacity enhancement projects was a major challenge for Railways. Without investment, it would not be possible to decongest the network, increase traffic output and generate adequate internal resources.
He said that without the fresh investment, the Railways would have gone further down and down and it would not have succeeded in breaking the vicious cycle. The Railway budget 2015-16 had, therefore, envisaged a new source of funds in the form of Institutional Finance.
It was a big achievement that within a few days of presenting the budget, the Ministry of Railways signed a Memorandum of Understanding with LIC for funding assistance of Rs.1.5 lakh crore for financing Railway projects over a period of 5 years.
As LIC funding will be of 30 year tenor, it matches the Railways’ requirement of long term funds for investment in projects. LIC funds will carry low interest rates tied to Government security, and the cost of funds is expected to come down further over a period of time.
The Minster said that an important beginning has been made today with the release of first cheque of LIC funds. It is now for the Railways to match up to the challenge of utilizing the funds in a productive and appropriate manner for realizing maximum benefit. He said that these funds will not only meet the requirement for the new railway projects but will also be utilised for those ongoing projects which will bring quick benefit to the railway system.
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