Indian Railways will mop up Rs 9,000 crore from market borrowings through its financing

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arm Indian Railway Finance Corporation (IRFC). Out of this, Rs 5,000 crore will be raised through issue of tax-free bonds. The government will also provide additional budget support of Rs 5,000 crore to the Railways in 2009-10 over and above Rs 10,800 crore committed in the interim budget.

“The finance ministry has approved issue of tax free bonds by IRFC, for the first time, after a gap of several years,” railways minister Mamata Banerjee said on Friday while presenting the Rail Budget for 2009-10.

The additional support of Rs 5,000 crore from the general budget has enabled the Railways to step up the plan allocation to Rs 40,745 crore, excluding the provision of Rs 3,300 crore for public private partnership (PPP) projects like modernisation of 50 stations and new locomotive plants through joint ventures. The interim budget had envisaged the 2009-10 annual plan size at Rs 37,805 crore.

The ministry will come up with a white paper on railway finances which will also dwell on the organisational and operational status based on the performance of the Railways in the past five years. It will also come up with a ‘vision 2020’ document, spelling out the short-term and long-term strategies.

“I will frame a suitable strategy and road map for coming years. I propose to take concrete steps to make Indian Railways a strong, responsive and vibrant organisation, with higher levels of capability and effectiveness,” the minister said.

An expert committee will be set up to advise the minister on innovative financing and implementation of “economically unviable” but socially desired projects. Banerjee said the railways would shortly prepare a blue print for implementation of such projects in the coming five years.

The railways have projected goods earnings at Rs 58,525 crore, up Rs 5,092 crore from 2008-09. Passenger earnings are projected to register a growth of 10.8 per cent at Rs 24,309 crore. The target for other coaching earnings is being kept at Rs 2,750 crore which would imply a growth of 40 per cent over 2008-09.

Banerjee said running of premium parcel services would “certainly” help realise this “difficult” target. “The target for sundry earnings is being pegged at Rs 2,760 crore, but once these initiatives take shape I am confident that not only will we improve on this but will be able to do wonders,” she added.

Gross traffic receipts have been projected at Rs 88,419 crore, reflecting an increase of Rs 8,557 crore on the actual receipts of 2008-09 reported to be Rs 79,862 crore.