* India considering foreign direct investment in railways
* Railways seek 302.2 billion rupees of support from federal
* Chidambaram to present interim budget on Feb 17
(Adds quotes, details)
By Manoj Kumar and Nigam Prusty
NEW DELHI, Feb 12 India left train fares and
freight rates unchanged in its interim railway budget, as
politicians try to please voters and manufacturing companies
ahead of national elections due in the next three months.
India's state-owned railways are the world's fourth-largest,
with 65,000 km (40,000 miles) of track, after the United
States, China and Russia, but have suffered from years of low
investment and a lack of policy reforms.
India last raised passenger fares in January 2013, after a
nine-year gap, snapping a populist trend in order to mend the
finances of a creaky rail network that drags on the economy.
Railways Minister Mallikarjun Kharge said the department
would rely on budgetary support as well market borrowing to
invest in new tracks.
"Inadequacy of financial resources is a key constraint to
railways," he said, while presenting an interim budget for the
first four months of the fiscal year to March 2015.
Indian Railways plans to invest 643.05 billion rupees
($10.33 billion) on new lines and other infrastructure in the
next fiscal year, up 8.3 percent from a revised figure of 593.6
billion in the current fiscal year, he said.
It expects support to the tune of 302.23 billion rupees
($4.85 billion) from the federal government's budget, and plans
to borrow about 198 billion from the market.
Annual gross tariff receipts are projected to grow 14.4
percent to reach 1.6 trillion rupees in the next fiscal year,
while working expenses are expected to rise 14 percent to 1.1
In election years, India presents an interim budget to seek
parliament's approval for planned expenditure for a few months,
but leaves the next government to take major policy steps in the
full-year budget after the polls.
The railway budget precedes the federal interim budget, to
be presented in parliament by Finance Minister P. Chidambaram on
Feb. 17, which is likely to raise funding for some vote-winning
projects while trying to rein in the fiscal deficit.
In a bid to please voters, the railways minister announced
72 new trains, despite the financial woes that beset the sector.
Successive governments have milked the railways to provide
voters with cheaper transport and employment. The railways
spends about $4 billion on passenger subsidy each year while
charging higher freight tariffs.
In the past five years, it has added about 260,000 staff to
rank among the world's largest employers, with a work force of
nearly 1.4 million.
The railways remain India's chief mode of long-distance
travel, despite a poor safety record of more than 2,200 deaths
in railway accidents in the last decade.
Kharge said the government was considering a proposal to
allow foreign direct investment in a bid to free up bottlenecks.
Once cleared by the federal cabinet, the measure would let
foreign investors fully own new passenger services in suburban
areas, high speed tracks, and connections to ports, mines and
But it will not open existing passenger and freight networks
to foreign investors.
India added just 1,750 km (1,087 miles) of new lines during
the period from 2006 to 2011, compared with 14,000 km (8,699
miles) by China, auditors Ernst & Young said in a report.
($1=62.2700 Indian rupees)
(Additional reporting by Rajesh Kumar Singh; Editing by Sanjeev
Miglani and Clarence Fernandez)