Millennium Post

LIC to invest Rs1.5 trillion in biggest ever Railways funding

LIC to invest Rs1.5 trillion in  biggest ever Railways funding
In the biggest ever funding for Indian Railways, national insurance company LIC on Wednesday committed Rs 1.5 lakh crore for railway projects over the next five years.

The investment would be made through bonds issued by entities of Indian Railways such as Indian Railways Finance Corporation (IRFC), beginning next fiscal. There would be a five-year moratorium on interest and
loan repayment.

However, LIC has made a hard bargain for its investments by ensuring a coupon rate 10 basis points higher than the 10-year benchmark government paper. “LIC has taken the task of supporting Indian Railways...It is a commercial decision... LIC will invest Rs 1.5 lakh crore over a period of five years,” Finance Minister Arun Jaitley said here.

An MoU was signed on Wednesday between Life Insurance Corporation (LIC) and the Ministry of Railways in this regard, which Railway Minister Suresh Prabhu termed as a “marriage” between two major organisations of the country that would be a “win-win situation” for both of them.

LIC will be subscribing to bonds worth Rs 30,000 crore on an average every year over the next five years, its Chairman S K Roy told PTI after signing of the MoU.

Asked about the expected returns for LIC from this investment, Roy said, “The rate is yet to be finalised. Since it is a commercial decision, it would be a win-win situation for both.” Terming the MoU as a significant step towards raising funds for Railway, Prabhu said on a lighter note, “People are always asking where is the money? So there is money, with honey because this is coming in at such a rate which is good for LIC and good for us.”

With these funds, the cash-strapped Railways will be able to augment its resources for speedier execution of projects. Jaitley also highlighted the need for improvement in performance of Railways.
“Railways have a long history. But the growth of Railway has to be expanded. Railways have to run professionally. Railway journey for passengers has to be a matter of comfort and delight. It can’t be a matter of compulsion with no option. Therefore, the quality of Railways has to hugely improve,” he said.

About LIC, Jaitley said that it is “a great commercial giant as well as an example of how state institutions can grow so huge, grow professionally, and serve the country”.

New rail body for private investor ties

Seeking technical cooperation for upgradation of rail infrastructure with foreign countries, Railways Minister Suresh Prabhu on Wednesday said the national transporter can grow faster based on the partnership model.

The Minister also said that a new body would be set up to enhance partnership with private investors, and raise efficiency and speed in implementing rail projects. “We need partnership which is our thrust area which I have mentioned in my budget speech. Partnership can help railways grow faster,” Prabhu said at an international conference on railways organised by Assocham and attended by Ambassadors of China, France and Czech Republic.

“We seek partnership with many of you and I look forward for Railways becoming a growth engine, Railways becoming the wheels of social transformation,” Prabhu added.
PTI

PTI

Our contributor helps bringing the latest updates to you


Share it
Top