Announcement of Fifty-Five Million Dollar Credit to India for Railways on September 24, 1969

.INTERNATIONAL DEVELOPMENT ASSOCIATION 1818 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 IDA Press Release No. 69/33 Subject: $55 million credit to India September 24, 1969 for railways The International Development Association (IDA) has approved a credit equi~ valent to $55 million to India. The credit will cover part of the foreign ex- change cost of the investment program of the Indian Railways for the two years 1969-71 which calls for a total equivalent to $709 millione The Indian Railways are one of the largest rail systems in the world, with al~ost 60,000 route kilometers, and one of the largest operating organizations of any kind with almost 1.4 million regular staff. Since 1951 the Railways • have greatly expanded both passenger and freight serT;i~::es; passengers carried have increased from 1.28 to 2.23 billion annually and originating tonnage of freight has risen from 93 to 205 million tons per year. The expansion of ser- vices required large outlays on the Railways' plant and equipment, and the World Bank Group has made a major contribution in this process; earlier loans and credits for the Railways have amounted to the equivalent of $576 million. The recession in India, following two years of drought, resulted in freight traffic remaining essentially the same over the past three years, and invest- ment by the Railways was scaled down accordingly. With the recent economic re- coverys traffic has increased and the Railways are once again planning invest- ments to meet further expected growth in traffic. Current plans call for em- phasis on improved efficiency of operations, particularly more intensive utili- • zation of plant and equipment • /more IDA P.R. No. 69/33 - India-Railways - 2 - The two-year program being assisted by the IDA credit provides mainly for rolling stock (44%), line capacity works and signaling, track renewals and • bridge work, and electrification. Of the total cost of $709 million, $95 mil- lion will be required in foreign exchange for imported equipment and imported components for equipment to be manufactured in the Railways' workshops. Apart frcm the IDA credit of $55 million, about $35 million is to be obtained from countries supplying equipment and ~hP. rP.m~ining rn~r n~ ~h~ r- n..-nn-..-!2m on,n11nt- ~ nn -o- ...·-, ....... .., ............ b to some $619 million, will come from India's own resources. The largest single category to be financed by the IDA credit (69%) will be the import of components and materials for rolling stock; other important items will be imported electrical, signaling and teleconnnunications equip- • ment. With the exception of certain components which will be purchased under licensing agreements and equipment where the Railways use sole source procure- ment for the sake of standardization, the goods to be financed by the credit will be procured under international competitive bidding. The credit to India will be for a term of 50 years, including a 10-year period of grace. It will be free of interest but will carry a service charge of 3/4 of 1% per annum which will cover IDA's administrative costs. - 0 - •