Cabinet approves formation of JV with states for rail projects

The Cabinet, under the chairmanship of Prime Minister Narendra Modi, on Wednesday gave its approval for allowing the ministry of railways to form joint venture companies with the state governments to mobilize resources for undertaking various rail infrastructure projects in States. “The joint venture companies would be formed with equity participation of ministry of railways and concerned state governments,” Cabinet said in a statement. Each Joint Venture (JV) would have an initial paid up capital of Rs 100 crores based on the quantum of projects to be undertaken. The Ministry of Railways’ initial paid-up capital will be limited to Rs. 50 crore for each State. Further infusion of fund or equity for the purpose of the projects shall be done after approval of the project and its funding at the level of appropriate competent authority. The JV can also form project-specific SPVs with equity holding by other shareholders like banks, ports, public sector undertakings, and mining companies, Cabinet said adding that the joint venture 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. This will also facilitate in faster statutory approvals and land acquisition. Besides travelling people, various cement, steel, power plants etc. would get the necessary rail link for transportation of their raw material and finished products, it added.