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Railways get $245 million loan from World Bank to develop railway logistics infrastructure

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A loan of USD 245 million has been approved by the World Bank to encourage the efforts put in by India towards the modernisation of the rail freight and logistics infrastructure in the country, according to a statement by the international financial institution. This shift from road to rail under the Rail Logistics project will help in making the rail transportation both freight and passenger-friendly, efficient and sustainable. Rail transportation will enable to reduce millions of tonnes of greenhouse gas emissions every year. This rail logistics project will also benefit many investments made in the railways by the private sector.

Ranking as the fourth-largest rail network in the world, Indian Railways has transported 1.2 billion tonnes of freight at the end of FY 2020. Despite this, only 17 per cent of Indian freight is transported by rail while 71 per cent is still transported by road. The statement by the international financial institution has also stated that the reliability and speed of shipments have reduced due to the capacity constraints that have limited the volumes to be carried in railways. As a result, the industry has been losing its share of markets in trucks over the years 2017-2018.

world bank

The World Bank has approved a loan of USD 245 million for the modernisation of rail infrastructure. 

Accounting for almost 95 per cent of emissions in the freight industry, Road freight is the most significant contributor to greenhouse gas emissions. In terms of road freight, about 12.3 per cent of road accidents are liable to trucks and about 15.8 per cent of the total deaths in road transport in 2018. With Indian Railways seeking to become a net-zero carbon emitter by 2030, rail can reduce 7.5 million tonnes of carbon dioxide and other greenhouse gases annually. Rail produces around one-fifth of GHG emissions produced by road transportation.

According to the Operations Manager and Acting Country Director of India, World Bank, Hideki Mori has said that the new rail logistics project will be beneficial for millions of rail passengers in India while it is also reducing the emission of greenhouse gases as with freight movement, the railway’s lines get decongested. Combining railways with the wider logistics sector is also a step toward reducing the logistics cost in India, which is much higher than the costs of logistics in developed countries. This project will enable Indian firms to compete better in the market.

The new rail logistics project will be beneficial for millions of rail passengers in India.

With a maturity of 22 years along with a grace time of seven years, the loan from the International Bank was approved by the Board of Executive directors for the Reconstruction and Development (IBRD). The world bank is also supporting the new Easter Dedicated Freight Corridor – 3 (EFDC). The statement also added that the project will primarily focus on dealing with commercial financing by enabling the private sector to engage and enhance the customer-directed approach.

The institutional development of the Dedicated Freight Corridor Corporation of India Limited will also be supported by the Rail freight project as a commercial institution focussing on multimodal transportation, as the railways have played a vital role as the central pillar of sustainable logistics in the ecosystem of freight transport.

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