The promise of freight corridors

The much-delayed project to build the ambitious eastern and western dedicated freight corridors has received a boost with the Cabinet Committee on Economic Affairs approving a revised cost estimate for it. At Rs.81,459 crore, the figure is more than double the originally estimated Rs.28,181 crore. The 1,839-km-long eastern corridor will connect Ludhiana in Punjab with Dankuni in West Bengal. It will have two components, a double-track section and a single-track segment, both electrified. It will cut across six States. The eastern corridor will cater to traffic streams including coal, finished steel, cement and fertilizer. The western corridor will cover nearly 1,500 km, connecting the Jawaharlal Nehru Port near Mumbai with Dadri, and passing through States such as Haryana, Rajasthan, Gujarat and Maharashtra. A substantial portion of the revised cost will be met by way of debt from multilateral institutions such as the Japan International Cooperation Agency and the World Bank. The equity requirement of the Railways will be around Rs.23,796 crore. Dedicated Freight Corridor Corporation of India Ltd., the special purpose vehicle set up by the Railways to implement the project, is keen to complete it by 2017-18. Once the twin-corridor system is in place, it will transform the very profile of the Railways. A host of positive outcomes, such as reduction in transportation costs and stepped-up commercial activity, benefiting a range of core industries, could flow from it. This could in turn have a multiplier effect on the economy.

Poor infrastructure has been a principal worry for Indian industry. More often than not, this has affected its ability to be efficient providers of goods and services. End-consumers have been forced to pay for the collective inefficiency. The twin-corridor project was conceived in 2005 and was approvedby the Congress-led United Progressive Alliance government in 2008. The huge cost overruns owing to the time lapse tell their own tale, and reflect the massive challenge facing policy-planners in pushing through a project of this size and magnitude that has inter-State implications. From a slow decision-making process to roadblocks to land acquisition, there are problems aplenty in the way ahead for the project. No doubt, land acquisition is turning out to be a touchy political issue. Prevarication on the decision-making front will hurt the viability of even soundly conceived projects. The Narendra Modi-led government would do well to ensure that the twin-corridor project goes through without any further delay. The key to doing so will lie also in taking along the States concerned.