India inks $120 Million Loan agreement with to improve Rail Infrastructure
Government has inked $120 million loan agreement with Asian Development Bank (ADB) for completion of projects to improve Rail Infrastructure along high-density corridors and operational efficiency of Indian railways.
The loan has 20-year term, including grace period of 5 years and have annual interest rate determined according to ADB’s London interbank offered rate (LIBOR) based lending facility, and commitment charge of 0.15% per year.
Rail Infrastructure Improvement Project
The loan amount is 3 tranche of $500 million multi-tranche financing facility for Railway Sector Investment Program approved by ADB Board in 2011. The loan amount will be used to complete the ongoing works commenced under earlier tranches.
The project is aimed at enhancing efficiency of rail infrastructure through electrification, introduction of modern signaling system and doubling rail tracks on key routes in country. It will help to develop energy-efficient, safe, and reliable railway system that will result in reduced travel time along project rail routes and improved operational and financial efficiency.
Funding will contribute towards achieving overall program outputs of double-tracking about 840 kms of rail routes and electrification of 640 kms of tracks along high density corridors. It will also help to implement new accounting systems and provide additional safety measures including collision avoidance equipment.
The loan proceeds will be used for busy freight and passenger routes in Chhattisgarh, Odisha, Maharashtra, Karnataka and Andhra Pradesh, including “Golden Quadrilateral” corridor that connects Chennai, Kolkata, Mumbai and New Delhi.
Asian Development Bank (ADB)
ADB is regional development bank which aims to promote social and economic development in Asia. It was established in 1966. It is headquartered in Manila, Philippines. Now it has 67 members, of which 48 are from within Asia and the Pacific and 19 outside.
The ADB has been modelled closely on World Bank. It has similar weighted voting system where votes are distributed in proportion with members’ capital subscriptions. As of 2014, Japan was largest shareholder (capital subscription) having 15.7% shares followed by US (15.6%), China (6.5%), India (6.4%), and Australia (5.8%).