NEW DELHI: In a big boost to cash-strapped railways, the government run transport received the highest ever funding of Rs 1.5 lakh crore for Railways from the Life Insurance Corporation of India for next five years for financing various railways projects. An MoU in this regard was signed on Wednesday between the two sides.
Railway Minister Suresh Prabhu said that LIC will give Rs 1.5 lakh crore in the course of next five years to finance various railway projects and the repayment will happen only after 30 years. Prabhu in the rail budget last month had talked about railways focusing on extra budgetary support to get financial resources for completing pending and new projects.
“This is the new paradigm shift in the Railways that we should fulfill the aspirations of a large number of population of India by finding out resources, not just increasing the fares on the passengers or only increasing the tariff or relying on the gross budgetary support but going beyond that,” Prabhu told Lok Sabha adding that more money will be raised in the next few years.
Calling it the first such step in its endeavour to make Indian Railways prosperous in the future, Prabhu said that with such encouraging initiatives, the Ministry of Railways will be able to augment its resources for speedier execution of projects.
Under this MoU, LIC will make available to the Ministry of Railways/its entities a financial assistance with a limit of 1.5 lakh crore over the next five years for implementing Railway projects. The financial assistance will be available from the Financial Year 2015-16 and there would be a five-year moratorium on interest and loan repayment.
The railway is also focusing on extra budgetary resources through market borrowings by tapping low cost long term funds.