Railways to focus on monetising assets; SBI Cap to draw up plan, says Suresh Prabhu

NEW DELHI: Indian Railways is targeting a higher share of non-railway revenue in the next five years to augment tariff-based operations. Railways Minister Suresh Prabhu has asked SBI Cap, the investment banking arm of the State Bank of India, to draw up a plan that will lean heavily on asset monetisation and providing end-to-end solutions to customers.

The other element of improving railway finances over the medium term is the creation of a holding company structure for the organisation that will allow the Railways to leverage its companies more for both raising resources and also keeping them within the organisation, Prabhu told ET. SBI Caps is in charge of this process as well.

Prabhu, brimming with ideas to turn the railways around, promises a visible change in the next five years.

The current year, however, is turning out to be difficult for Indian Railways because of the decline in the key business—the movement of resources. Meanwhile, the railways is facing a Rs 32,000-crore wage bill increase on account of the pay commission award.

"Our cost saving will be really high, so it may not be so bad this year. Next year, the full blow of pay commission will come... we are talking to the finance ministry," Prabhu said, before adding that over the longer term he was not worried, detailing a plan for investment and customers.

"The challenge is next five years—when your projects are not complete, costs have increased after pay commission. After that I don't think there is any problem," the minister said. "First phase of the payoff from what the government is doing is five years."