India to spend $9bn on rail expansion

India unveiled a $9 billion (Dh33.03bn) plan yesterday to expand its creaky and overstretched railway system and cut rail freight rates on grain and kerosene, a move which could help ease growing inflationary pressures.

The government said it would permit private operators to invest in rail infrastructure and run special freight trains to ease transport bottlenecks which have long been a brake on India's growth.

The government plans to build more than 1,000km of track and add 18,000 railcars in the year to March 2011, Rail Minister Mamata Banerjee said as she presented the railway budget to parliament. In a move which could help cool surging food and fuel prices, the government announced that freight rates for food grains and kerosene would be cut by Rs100 (Dh7.93) per railcar.

"It is not a populist budget as such. In an inflationary situation, any increase in fare and freight rates would have led to inflationary spiral," said DH Pai Panandikar, head of think tank RPG Foundation.

India's railways carry more than 18 million passengers and two million tonnes of freight each day.

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