Photographer: Dhiraj Singh/Bloomberg

India Railway Said to Mull Land Sales for $4.7 Billion Wage Bill

  • Network estimates wage cost set to climb 320 billion rupees
  • Increase threatens to crimp pace of investment in upgrades

Indian Railways, the world’s fourth-longest network, is considering land sales and exports of trains to Asia and Africa to help fund a looming wage increase of 320 billion rupees ($4.7 billion), people familiar with the matter said.

The state-run network is exploring other steps such as selling advertising space, the people said, asking not to be identified as the information isn’t public. Increases in fares are unlikely and the railway could cut costs by about 15 percent in one to two years, they said.

The pay increase, recommended by a panel that advises on remuneration for federal employees about once a decade, threatens to crimp Prime Minister Narendra Modi’s push for faster investment in network modernization. The railway has about 1.3 million workers and has struggled to achieve the kind of operating efficiency the people said it would need to avoid making losses because of the climbing wage bill.

They said they remain hopeful of assistance from the finance ministry, even after an initial request for the full 320 billion rupees was rebuffed. The strategy of boosting non-fare revenues and curbing costs will probably be a key part of Railway Minister Suresh Prabhu’s budget speech for the network due late February, the people said.

Modi’s Vision

The railway’s spokesman referred a request for comment to the railway board’s finance department, which referred the request to the board’s budget unit. S. Subramhanyan, an additional member representing the budget department, didn’t respond to a phone call and text message seeking comment.

Modi’s vision is to add track, world-class stations and bullet trains to ease congestion and spur economic growth. India also plans to transport more freight, such as coal, on dedicated lines. 

The challenge is finding the money. The premier has opened the doors to foreign investment in railroads, part of a push for an ambitious 8.5-trillion-rupee revamp of the network through 2020.

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