Announcement of Seventy Million US Dollars Loan for Indian Railways on July 29, 1960

.. FO'R IMMEDIATE RELEASE . WORLD • RECONSTRUCTION AND DEVELOPMENT, ( 1818 H STREET, N.W., WASHINGTON 25, D. C. TELEPHONE: EXECUTIVE 3-6360 PRm3S RELEASE NO".. 644 SUBJECT: $70 million loan for July 29, 4:-960 Indian Railways The World Bank today made a loan equivalent to $70 million to India fq~ '-.., ~ the improvement and expansion of the Indian Railways. The loan will· cover the greater"-part of the foreign exchange required for the final year of the railway // ~ progr8:m under India's Second Five.-Year Plan, ending March 31, 1961. The rail- way program has been a central part of the Plan, accounting for about one·- quarter of all public expenditures under the Plan. Six private commercial banks are participating in the loan., without the • World Bank's guarantee, to the extent of $2,050,000, representing the first maturity and part of the second. which fall due between January 1964 and July 1964. The participating banks are The Chartered Bank (New York Agency), The First National City Bank of New York, Girard Trust Corn Exchange Bank, Irving Trust Company, Chemical Bank New York Trust Company, and The Philadelphia National Bank. The Bank has now lent $328 million for the Indian Railways, the largest amount ever lent by the Bank for a single project. A loan of $33 mil1ion was made in 1949 for railway rehabilitation and since thel'i sc=vt=.r:l lua.i..i~ "uL_~llng $295 million have been made to assist in financing the Indian Railways' program of expansion in the Second Five-Year Plan. The Indian Railway syste~-? comprising some 35,000 route miles, is one of the large~t in the world. It is owned by the Government and managed by the • •1 Railway Board, a part of the Ministry of Railways. The railways handle the bulk of India's long distance freight and passenger traffic and play a vital role in the economic development of the country.  - 2 - The ~ive-year railway program is being carried out to increase carrying • capacity and improve operational efficiency. Its goal is to increase frei:ight capacity from 114 million to 162 million tons a year, and to increase passenger capacity by about 15%. The most important objectives of the progr~\m are the acquisition of 2,161 locomotives, 8,836 passenger cars and 111,739 freight cars; the doubling of 1,300 miles of main-line track; the replacement of 8,000 miles o:f track; the construction of 830 miles of new lines to give access to coal and ore fields and. to areas lacking transportation;_ the electrification of 886 miles of mainl,;..1::.:'~ in regions of high density passenger and freight traffic, parti- cularly the Calcutta area and lines serving steel plants; the construction of bridges; and improvements in yards and signaling facilities. By the fourth year of the program,'the amount of :freight traffic originating in India had. risen by a fourth to 145 million tons ·and passeng~r traffic had. increased by 16%. By December 31, 1959, the Railways had received delivery of 1,817 locomotives, 5,700 passenger cars and 83,606 freight cars. About 6,500 miles of rail have been replaced; track doubling has been completed on 700 miles; 600 miles of new lines have been opened to traffic; the electrification of 675 miles was scheduled for completion in the first half of 1961 with the balance later, and final shipment of 110 electric locomotives in January 1961. One of the largest b:ridges in the progrffru, the Ganga bridge across the River Ganges in Bihar state, was opened in May 1959 and carries 80% more traffic than the ferry . I service,. it replaced. Work on other bridges and on improvements in yards and signaling equipment is proceeding well. Total investment in the railway program in the first four years of the Second Five~iYear Plan is estimated· at 8.7 billion rupees ($1,827 million); and 2.3 billion rupees ($483 million) is expected to be expended during the current and last year of the Plan. Of the total amount, foreign exchange requirements are now estimated at $718 million, of which 40% will have been supplied by the Bank and another 20"/o from other ex:ternal sources. The original foreign exchange . . l\  - 3 - II estimate was $893 million. This has been progressively reduced. to the present, figure of $718 million because of the increased availability of railway equipment manufactured in India. The Indian Railways estimate that $85 million in foreign exchang~ will be required for purchases in the last year of the program. The TATrrrl n 'A~.nk .'"h::mn (~/ "'n"411 0 provide $70 million of this amount and will. be used. for the purchase abroad of rolling stock, track material~\ and other equipment. The Bank loan is £or a term of 20 years and bears interest of 5-3/4% per annum,,;' including the 1% commissio~} which is allocated tb the Bank's Special Reserve. Amortization will begin in January 1964. The Consort_ium of Government representatives.of Canada, Germany, Japan, the United Kingdom and the United States first met, at the invitation of the Bark, • in August 1958 to seek wa:ys of helping India to m~et the foreign exchange re- quirements of the remaining years of the Second Five-Year Plan. At that time the Bank indicated its intention of extending loans to India in the amount of $225 million for the 2-1/2 years remaining of the Plan. Total Bank lending for that purpose now amounts to $255 million, of which $225 million is expected to 1 i be disbursed when the Plan period ends on March 31, 1961. The Bank has now made 24 loans totaling $662 million in India. In addition to the railways, the loan.s have been made for the expansion of iron and steel production and of electric power facilities, for the purchase of commercial air- craft, Jot- the development of agriculture and ports, .and for a development ·,;bank to lend to private industry. After having been approved by the Bank's Executive Directors the loan documents were signed by His Excellency Mahomedali Currim Chagla, Ambassador • of India in Washington, ·on behalf of India.