INDIA is to open up its dilapidated, colonial-era railway network to foreign investors in one of Premier Narendra Modi’s first moves to meet poll promises of boosting growth and strengthening infrastructure in the subcontinent.

The antiquated train network needs at least $93bn over five years to upgrade track, strengthen bridges and modernise signalling and communications to meet the demands of the modern Indian economy.

Mr Modi’s government also wants to create high-speed rail links between large cities, starting with the line between Mumbai and Ahmedabad, 500km away. Each of these links would cost about $10bn.

Mr Modi won power in May on a pledge to revive faltering growth and encourage more foreign direct investment, especially in infrastructure.

Indian Railways, the third-largest train system, carries 23m passengers and 2.6m tonnes of freight on 19,000 daily trains. However, the state- run network, which employs 1.3m people, has struggled to keep pace with rising economic aspirations.

About 94pc of the system’s revenue is spent on operating costs and social obligations, leaving little to modernise its creaking infrastructure. Of India’s 130,000 railway bridges, about 25pc are more than a century old.

D V Sadananda Gowda, the railways minister, said last week the government intended to rely primarily on public-private partnerships to fund an array of projects including station upgrades and bullet trains.

The cabinet would be asked to approve foreign direct investment in railway infrastructure, which had previously not been allowed, he said.

The growth of the rail sector “depends heavily on availability of funds for expansion of railway infrastructure,” Mr Gowda said as he unveiled his budget for the coming year. “Internal resources are insufficient to meet the requirement.”

Infrastructure experts said institutional reforms, such as creating an independent rail regulator, would be required to lure private funds.

Past efforts to encourage private investment in rail projects have failed due to conflicts between investors and officials.

The minister proposed establishing automatic revisions to subsidised fares — linked to fuel prices — to reduce political skirmishing over increases needed to cover rising costs.

India’s equity markets, which had risen 21pc this year, fell nearly 600 points, or more than 2pc, on profit-taking, the biggest one-day fall in 10 months, after the railways budget was presented.

Published in Dawn, Economic & Business, July 14th, 2014