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Background

 

Economic liberalization policies of 1991 followed by information technology explosion have taken India to a new growth scenario. Backed by strong fundamentals and commendable growth in the past three to four years, the resplendent Indian Economy is poised to grow even further at an average of 8 to 10% in the next 3 years. Transport requirement in the country, being primarily a derived demand, is slated to increase with elasticity of 1.25 with GDP growth by 10 to 12% in the medium and long term range. Riding on the waves of economic success, Indian Railways has witnessed a dramatic turn around and unprecedented financial turnover in the last two and a half years. This has been made possible by higher freight volumes without substantial investment in infrastructure, increased axle load, reduction of turn-round time of rolling stock, reduced unit cost of transportation, rationalization of tariffs resulting in improvement in market share and improved operational margins. Over the last 2 to 3 years, the railway freight traffic has grown by 8 to 11%, which is projected to cross 1100 million tonnes by the end of XIth Five Year Plan.

Need for Dedicated Freight Corridor Project

 

The Indian Railways' quadrilateral linking the four metropolitan cities of Delhi, Mumbai, Chennai and Howrah, commonly known as the Golden Quadrilateral; and its two diagonals (Delhi-Chennai and Mumbai-Howrah), adding up to a total route length of 10,122 km carries more than 55% of revenue earning freight traffic of IR. The existing trunk routes of Howrah-Delhi on the Eastern Corridor and Mumbai-Delhi on the Western Corridor are highly saturated, line capacity utilization varying between 115% to 150%. The surging power needs requiring heavy coal movement, booming infrastructure construction and growing international trade has led to the conception of the Dedicated Freight Corridors along the Eastern and Western Routes.

Historical Perspective

 

Accordingly, the seeds for the project were sown as early as in April, 2005, wherein, Hon'ble Prime Ministers of India and Japan made a joint declaration for feasibility and possible funding of the dedicated rail freight corridors. Hon'ble Minister for Railways, almost at the same time, announced in the Parliament the need and planning for the project. Immediately thereafter, RITES was entrusted with the feasibility study of both eastern and western corridors. In May 2005, Committee on Infrastructure (COI) constituted a Task Force, chaired by Shri Anwarul Huda, Member Planning Commission to prepare a concept paper on Delhi-Mumbai (Western) and Delhi-Howrah (Eastern) dedicated freight corridor projects, and to suggest a new organizational structure for planning, financing, construction and operation of these corridors. RITES, in January 2006, submitted the Feasibility Study Report of both the corridors to Ministry of Railways. Almost simultaneously, the Cabinet approved the report of the Task Force of the COI, which directed that a SPV should be set up to construct and operate the DFC. Cabinet Committee on Economic Affairs (CCEA) gave "in principle" approval to the Feasibility Study report asking the MOR to go ahead with Preliminary Engineering cum Traffic Survey (PETS) for the two corridors, firm up the cost of the project and work out the financing options. In consonance with the recommendation of the Task Force of COI, a SPV, named "Dedicated Freight Corridor Corporation of India Limited (DFCCIL)" was incorporated under Companies Act in October 2006. Subsequently, RITES submitted the PETS Report based on which the project was approved at a cost of Rs. 28,181 Crore.
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