With a view to ensure greater participation of states, the Union Cabinet on Wednesday allowed the Railways to form Joint Venture (JV) companies with state governments to mobilise resources for speedy implementation of rail projects.
Keeping in mind the growing demands for railway lines in states and huge requirement of funds to execute them, JV companies will be now responsible for identifying projects, land acquisition and possible financing in addition to government funding and also monitoring.
The Cabinet presided by PM Narendra Modi decided that the JVs would be formed with equity participation of Ministry of Railways and concerned state governments. Each JV would have an initial paid-up capital of Rs 100 crore based on the quantum of projects to be undertaken, a statement said. Railways' initial paid-up capital will be limited to Rs 50 crore for each state.
Further infusion of fund/equity for the projects shall be done after they are approved, the statement added.
The JV can also form project-specific SPVs with equity holding by other shareholders like banks, ports, public sector undertakings, mining companies. The exercise would ensure greater participation of state governments in implementation of Railway projects, both in terms of financial participation as well as decision making process.