Saturday, August 25, 2012

Asian Development Bank Extends Aid to India

ADB: Railway Sector Improvement Project: India
ET: Asian Development Bank to Provide a $150 million Loan to Indian Govt to Improve Rail Freight Services
India Government Bureau: India Gets $150mn ADB Loan for Rail Development
News Track India: Asian Development Bank Provides 67.6 Million Dollar Loan to Bihar Agribusiness
PIB: ADB Extends $150 million Loan to Develop India’s Railway System

On July 11, the Asian Development Bank (ADB) announced that it had granted a loan of $150 million to India as the first part of the Railway Sector Investment Program, to improve passenger transport routes and rail freight services. The total cost of the Railway Investment Program is $1.14 billion, of which the ADB will provide $500 million in four installments while the government of India will contribute a total of $644.6 million.

The Indian government will use the loan to lay down double-track line for about 840 kilometers (km) of rail routes and set up electricity through about 640 km all to help improve its rail services along some of the busiest freight and passenger routes in the country. The program will reduce fuel consumption and pollution as the tracks will allow easier passage of freight trains, while the electricity lines laid along the routes will help lower the amount of fuel needed and the emissions from using fuel, because electricity will power some items that had been powered by fuel previously. The program will also enhance railroad safety, as there will be more available tracks to use along the busiest routes so trains will not be congested into small areas of track. In addition, the program will increase the capacity of railway tracks as there will be double track lines laid, meaning that double the amount of traffic can transport goods along the lines. The increased capacity of the Indian railroad system to carry products and people will benefit consumers and producers of goods and services because it will make it easier for the goods and products to get to other areas of the country in a faster and more efficient manner.

The program is also set to improve energy efficiency, reliability, affordability of travel and environmental sustainability along some of the busiest rail travel routes. The program will improve energy efficiency because it will shift a large amount of the transportation of goods from road to rail, which is more environmentally friendly as a railcar can take bigger loads, which means fewer emissions into the environment. The program will improve reliability on rail travel routes because the laying of double tracks along busy routes will lead to less trains waiting to use certain tracks. The program will also improve affordability of travel because more trains will be able to travel along the routes since there is more track, therefore there is not as limited a number of tickets available each day. Thus, more trains means more tickets available for sale; therefore, consumers will be able to find cheaper seats as rail companies lower their prices to fill the extra seats available.

A $300,000 portion of the program provided by ADB will also promote sustainable transportation--a means of transport with low impact on the environment--by monitoring carbon emission reductions. The reductions in carbon emission will come from the shifting of a large amount of the transportation of goods from road to rail. The Railway Sector Investment Program will also pursue carbon credits, or a tradable certificate representing the right to emit one ton of carbon dioxide, under the United Nations Framework Convention on Climate Change (UNFCCC). The UNFCCC is an international environmental treaty was aimed at stabilizing greenhouse gas concentrations in the atmosphere at a level that is not dangerous to the climate of Earth.

The ADB supported the project because it believed that efficient transportation is essential for achieving higher levels of economic growth in India. The higher levels of economic growth will help sustain poverty reduction in the country and will contribute to more production and employment opportunities in India. Thus, the ADB is aiding India in modernizing their infrastructure and becoming more competitive in the global economy.

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