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Indian Railways is set to adopt the public-private partnership (PPP) model for the development of new infrastructure projects, aiming to share the costs of large-scale initiatives. The state-run transporter is focusing on key projects, including the construction of commercial lines and mineral corridors, in the coming months under this model.
The shift towards PPP is part of a broader government strategy to attract private investment into railways, enabling the allocation of public resources to social sectors and other infrastructure development. This move follows a recent infrastructure review meeting, where it was highlighted that the railways should diversify its approach by considering PPP for infrastructure development rather than solely relying on the engineering, procurement, and construction (EPC) mode.
Despite the push for PPP, Indian Railways is expected to see a significant increase in capital expenditure in the upcoming FY26 budget, surpassing the Rs 2.62 lakh crore allocated for this fiscal year. Traditionally, the railways have funded infrastructure projects entirely through public investment and recouped costs via freight levies. However, under the new PPP strategy, new commercial lines will be developed in collaboration with private entities, while the Railway Board will retain control over sensitive decisions related to fares and passenger movement.
The railways currently operates major economic corridors for the transportation of coal, minerals, and cement, aimed at improving port connectivity and alleviating traffic congestion. These corridors are estimated to require over Rs 5.25 lakh crore by 2031.
As part of the Sagarmala programme, 114 port-rail connectivity projects worth Rs 1 lakh crore are underway. Of these, 49 projects have been completed, with 65 more in various stages of development. The 2024-25 budget allocates Rs 68,634.44 crore for new lines, gauge conversions, and doubling, slightly lower than the Rs 73,734.57 crore allocated in 2023-24.
PPP corridors will likely follow the Merry-Go-Round (MGR) model, already used for short-haul freight, where rail tracks are funded by the beneficiaries. Railways will handle operations, provide locomotives, and manage rolling stock. Additional revenue will come from leasing vacant land adjacent to redeveloped stations, which will be used for commercial purposes such as hotels and shops, enhancing passenger amenities. |
