The announcement by the Union government to usher in major changes by way of the National Monetization Pipeline (NMP) plan on 23 August has triggered polarizing debates on the possible implications of this policy. Projected revenue from railways is expected to be ₹1.5 trillion and will contribute to 25% of the overall pipeline of ₹6 trillion.
It is important to remember that asset monetization is a measure to generate additional capital for new infrastructure creation without the sale of any public asset. NMP merely provides a mechanism for enabling private companies to lease and operate infrastructure owned by the government. Against this backdrop, it would be worthwhile to analyze the ways in which this measure could impact the railways.
Owing to a network of 121,407km of total track over a 67,368km route, the Indian Railways is the fourth-largest in the world in terms of size and employs more than 1.3 million people. The freight trains are particularly significant from the perspective of commerce, and transport more than 90% of the coal that provides 50% of the country’s power requirement.
However, since the railways has been primarily dependent on government support since independence, it was challenging to generate adequate funds for capital expenditure. Bulk of the funds continued to be subsumed under operating expenses. Infrastructure and funding challenges in railways manifested in the form of collisions, derailments and level crossing accidents. Besides, in the last fiscal, covid-induced disruption resulted in a revenue loss of ₹38,017 crore in the passenger segment.
Asset monetization in this context assumes significance as it will pave the way for greater influx of funds by private players. In recent years, we have already witnessed an uptick in investor sentiment—in 2015, General Electric won a $2.6-billion contract to supply 1,000 locomotives (100 locomotives on yearly basis for 11 years). Since India’s railways is a lifeline for more than 30 million citizens who use it every day—modernizing the facilities and enhancing speed will go a long way towards making our workforce more productive.
The announcement by the Union government to usher in major changes by way of the National Monetization Pipeline (NMP) plan on 23 August has triggered polarizing debates on the possible implications of this policy. Projected revenue from railways is expected to be ₹1.5 trillion and will contribute to 25% of the overall pipeline of ₹6 trillion.
It is important to remember that asset monetization is a measure to generate additional capital for new infrastructure creation without the sale of any public asset. NMP merely provides a mechanism for enabling private companies to lease and operate infrastructure owned by the government. Against this backdrop, it would be worthwhile to analyze the ways in which this measure could impact the railways.
Owing to a network of 121,407km of total track over a 67,368km route, the Indian Railways is the fourth-largest in the world in terms of size and employs more than 1.3 million people. The freight trains are particularly significant from the perspective of commerce, and transport more than 90% of the coal that provides 50% of the country’s power requirement.
However, since the railways has been primarily dependent on government support since independence, it was challenging to generate adequate funds for capital expenditure. Bulk of the funds continued to be subsumed under operating expenses. Infrastructure and funding challenges in railways manifested in the form of collisions, derailments and level crossing accidents. Besides, in the last fiscal, covid-induced disruption resulted in a revenue loss of ₹38,017 crore in the passenger segment.
Asset monetization in this context assumes significance as it will pave the way for greater influx of funds by private players. In recent years, we have already witnessed an uptick in investor sentiment—in 2015, General Electric won a $2.6-billion contract to supply 1,000 locomotives (100 locomotives on yearly basis for 11 years). Since India’s railways is a lifeline for more than 30 million citizens who use it every day—modernizing the facilities and enhancing speed will go a long way towards making our workforce more productive.
The announcement by the Union government to usher in major changes by way of the National Monetization Pipeline (NMP) plan on 23 August has triggered polarizing debates on the possible implications of this policy. Projected revenue from railways is expected to be ₹1.5 trillion and will contribute to 25% of the overall pipeline of ₹6 trillion.
It is important to remember that asset monetization is a measure to generate additional capital for new infrastructure creation without the sale of any public asset. NMP merely provides a mechanism for enabling private companies to lease and operate infrastructure owned by the government. Against this backdrop, it would be worthwhile to analyze the ways in which this measure could impact the railways.
Owing to a network of 121,407km of total track over a 67,368km route, the Indian Railways is the fourth-largest in the world in terms of size and employs more than 1.3 million people. The freight trains are particularly significant from the perspective of commerce, and transport more than 90% of the coal that provides 50% of the country’s power requirement.
However, since the railways has been primarily dependent on government support since independence, it was challenging to generate adequate funds for capital expenditure. Bulk of the funds continued to be subsumed under operating expenses. Infrastructure and funding challenges in railways manifested in the form of collisions, derailments and level crossing accidents. Besides, in the last fiscal, covid-induced disruption resulted in a revenue loss of ₹38,017 crore in the passenger segment.
Asset monetization in this context assumes significance as it will pave the way for greater influx of funds by private players. In recent years, we have already witnessed an uptick in investor sentiment—in 2015, General Electric won a $2.6-billion contract to supply 1,000 locomotives (100 locomotives on yearly basis for 11 years). Since India’s railways is a lifeline for more than 30 million citizens who use it every day—modernizing the facilities and enhancing speed will go a long way towards making our workforce more productive.
The announcement by the Union government to usher in major changes by way of the National Monetization Pipeline (NMP) plan on 23 August has triggered polarizing debates on the possible implications of this policy. Projected revenue from railways is expected to be ₹1.5 trillion and will contribute to 25% of the overall pipeline of ₹6 trillion.
It is important to remember that asset monetization is a measure to generate additional capital for new infrastructure creation without the sale of any public asset. NMP merely provides a mechanism for enabling private companies to lease and operate infrastructure owned by the government. Against this backdrop, it would be worthwhile to analyze the ways in which this measure could impact the railways.
Owing to a network of 121,407km of total track over a 67,368km route, the Indian Railways is the fourth-largest in the world in terms of size and employs more than 1.3 million people. The freight trains are particularly significant from the perspective of commerce, and transport more than 90% of the coal that provides 50% of the country’s power requirement.
However, since the railways has been primarily dependent on government support since independence, it was challenging to generate adequate funds for capital expenditure. Bulk of the funds continued to be subsumed under operating expenses. Infrastructure and funding challenges in railways manifested in the form of collisions, derailments and level crossing accidents. Besides, in the last fiscal, covid-induced disruption resulted in a revenue loss of ₹38,017 crore in the passenger segment.
Asset monetization in this context assumes significance as it will pave the way for greater influx of funds by private players. In recent years, we have already witnessed an uptick in investor sentiment—in 2015, General Electric won a $2.6-billion contract to supply 1,000 locomotives (100 locomotives on yearly basis for 11 years). Since India’s railways is a lifeline for more than 30 million citizens who use it every day—modernizing the facilities and enhancing speed will go a long way towards making our workforce more productive.
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