Announcement of IBRD and IDA Approve Four Hundred Million Dollars for Indian Railways on November 18, 1982

FOR IMMEDIATE RELEASE .World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE 83/ 19 Contact: Hugh Blackman IDA NEWS RELEASE 83/21 ( 202) 47 7-3879 November 18, 1982 IBRD AND IDA APPROVE $400 MILLION FOR INDIAN RAILWAYS India's railway system will receive $400 million in a combination loan and credit from the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The $1,215.7 million Second Railway Modernization and Maintenance Project is the fifteenth in a series of IBRD/IDA operations with Indian Railways, which operates the world's second largest railway system. Indian Railways is the backbone of the country's internal freight and passenger transportation system, carrying two-thirds of the total freight traffic to domestic markets throughout India, and nearly one-half of the passenger traffic. It is the nation's largest employer with a staff of about 1. 7 million. • Lending to India's transport sector since the first railway loan in 1949 totals $1,352.1 million, and includes ports~ rural roads, and highway projects. The railway sector has received direct assistance of $1,086 million through 14 World Bank loans and IDA credits. During the last 30 years of the planned development of the Indian Railways, the main railway infra-structure has been substantially improved, and motive power has progressed from steam to diesel and electric locomotives. The project will continue efforts begun under the first Railway Modernization and Maintenance Project of 1978, which was assisted by a $190 million IDA credit. That project was designed to help the Indian Railways reduce manufacturing and maintenance costs of locomotives and rolling stock, and to improve their performance and availabilityo The project is proceeding well, and a plant for the manufacture of wheels and axles in Yelahanka in Karnataka is expected to begin operation by December 1982. The second project will continue to imprmre maintenance and reliability of the fleet of existing diesel and electric locomotives, and will expand a program of modernization of electric locomotives. A maintenance facility will be built in Patiala in Punjab and equipped for remanufacturing diesel and electric locomotives, as well as components and assemblies. It is expected to begin production in 1985. • •• I • NOTE: IDA credits are demoninated in SDRs (Special Drawing Rights), which are valued on the basis of a "basket" of currencies. The U.S. dollar equivalent of the SDR amount of the IDA credit reflects the exchange rates existing at the time of negotiation of the credit.  - 2 - Up to 20 complete prototype AC electric locomotives will be imported for testing under Indian operating conditions. This testing is preparatory to choosing the new generation of mainline locomotives in India. The project will also provide components for the manufacture of 11,300 high capacity freight • wagons, and for technical assistance and training for Indian Railways staff. The IDA credit is for 50 years, including 10 years of grace; it carries no interest but bears a small annual service charge (0.5% on the undisbursed balances of the credit and 0.75% on the disbursed balances). The $200 million IBRD loan is for 20 years, including five years' grace, with a variable interest rate linked to the cost of borrowing. The loan also carries an annual commit- ment charge of 0.75% on undisbursed balances and a front-end fee of 1.5% on the amount of the loan. • •