With projects worth Rs 1.45 lakh crore pending, the cash-strapped railways plans to offer incentives, including tax holidays, to attract private players to invest in pending socially desirable and strategically located projects. A parliamentary panel was recently informed that the railways will approach the finance ministry after formulating the proposal.
The move is an attempt to make investments in socially desirable but economically unviable projects attractive under public private partnership (PPP) mode by offering tax incentives and concessions after the lukewarm response of private players.
The state-run transporter is considering incentives like tax holidays under the I-T Act, exemptions from central excise and custom duty on purchase of capital goods, relief from sales tax and VAT and relief from payment of octroi and entry tax.
Parliament’s Railway Convention committee has asked the railways to examine the prospect of PPP in socially desirable projects in backward areas in consultation with finance ministry.
“Most of the socially desirable projects have low financial returns in the short run, but yield high socioeconomic dividends. The government has to support such projects,” a railway official said.
Faced with funds crunch and a large number of pending projects, railways has given priority to those projects in which state governments —such as Karnataka, AP, MP, Chhattisgarh and Maharashtra — are sharing costs.