Leading brokerage JM Financial has come out with its report 'Railways: Turning the Corner' <g data-gr-id="28">focussing</g> on Indian Railways. The report stated that huge investment in the sector is expected to have a multiplier effect of 5.73 <g data-gr-id="29">per cent</g> on the country's GDP.
The government is also working on <g data-gr-id="34">a long-term structural reforms</g> which will help transform the Railways from a government-led monopoly, the report stated.
Over the past one decade, the government has spent only 0.3-0.5 <g data-gr-id="23">per cent</g> of its GDP as capital investments in the Railways, while the roads have been getting considerably higher allocations, it said.
This neglect is even clearer from the collections of the diesel cess authorised by the Central Road Fund Act. While the Railways gets only 12.5 <g data-gr-id="25">per cent</g> of the total amount annually credited to the fund, roads get 50 <g data-gr-id="26">per cent</g> of the share, the report further said.
It can be noted that Prime Minister Narendra Modi-led government had chosen the Railways as a big driver for country's growth with a capital investment of Rs 8.5 trillion over next five years, which is 3.3 times over the previous five years.
This is a clear break from the decades of under-investments in building physical infrastructure which led to lower capacity expansion.
Noting that the railways <g data-gr-id="30">has</g> had a weak track record for executing projects, the report notes that
historically, many of its projects have suffered from time and cost overruns.
During the last 30 years, out of the 676 projects worth Rs 1,57,800 crore sanctioned, only 317 projects have been completed as of 2014.