Railways can add 2% to India’s GDP, says Prabhu

Railway minister Suresh Prabhu in a CII conference on Sunday said he has asked the Railway Board to identify key issues and focus areas.

He said Indian Railways could contribute up to 2 per cent to the country's GDP growth and can help realise dream of double-digit growth.

Having presented his maiden railway budget in parliament on 26 February the minister is likely to conduct a meeting with the board soon. He said the states have agreed to work with the ministry in respect to the investment agenda set by the government. The states will be putting equity in some railway projects, he added. 

In his railway budget, Prabhu did not increase passenger fares at all, while at the same time promising to improve facilities on board trains and at station, emphasising on digital interfaces to make the entire experience of train travel more customer-friendly.

Having often admitted that the railways are broke, he did not explain how he would immediately meet the objectives without raising passenger fares across the board, except by raising freight fares – as he has already done through the back door for critical products like foodgrains and urea.

India's rail freight rates are already probably the highest in the world, cross-subsidising passenger fares but skewing the economy as a whole.

In the conference on Sunday he said public sector banks and railway ministry will work together on expanding the rail network.  The ministry is also expected to sign agreements with financial institutions to fund project and issue tax free bonds soon.

Prabhu also said that the ministry needs to completely revamp the public-private partnership (PPP) model to make the investment programme successful.

(Also see: Prabhu mulling grievance system for railway investors)