Indian Railways has potential to fulfil PM Modi's dream of making India a $20-tn economy, but its finances are in 'deep trouble' and the state-run utility has been caught in a "vicious circle" of poor investments compromising its services, railway minister Suresh Prabhu said.
Pitching for increased investment into Indian Railways, the minister said there was a need to create new financial instruments in the country, and suggested the possible use of pension funds to bridge the investment deficit.
Speaking at the ET Business Summit today, he said pension funds could be one of the possible means of pumping in the money into the public sector behemoth, which is facing losses to the tune of thousands of crores.
The railways need huge investment in order to make it an engine of growth for the economy, as development of the railways could bring immense downstream benefits, he said.
Prabhu said private sector participation was imperative in bringing finances to railways as railway finances were in a very bad shape and the sector had sunk into a vicious circle.
"There is little investment which is causing deterioration of service which in turn has made railways a less attractive sector for more funds, " the minister said.
He expressed optimism that a 3 per cent growth in railways could result in a 9 per cent growth of the country's economy.
Referring to Prime Minister Narendra Modi's aim of lifting the economy to $20 trillion from $2 trillion, Prabhu said ambitious policies face financial constraints and the government is most often forced to go for the "doable" in setting targets.
Terming lack of physical infrastructure as a "road block", Prabhu said many things have to be put in order to achieve the desired growth levels.