KRCL’s merger with Indian Railways on the anvil

The government of Karnataka has approved the merger of Konkan Railway Corporation Limited (KRCL) with the Indian Railways. Many feel that such a move should have happened much earlier and could have benefited the state much earlier. Interestingly, the Karnataka government currently holds 11.62 per cent equity in KRCL.  Now the state government is waiting for exit options from KRCL which it may give soon. The KRCL had directed the Karnataka government to either invest a sum of Rs 91.58 billion in development projects for the next 15 years or hand over its share to Indian Railways. 

The state government had been demanding this for a very long time as Karnataka coastal region was not getting enough the kind of attention it needed in terms of new stations, infrastructure and new train routes. As per media reports, ministers, MPs, and MLAs from the state have time and again welcomed the move due to the poor financial condition of the KRCL. The aim of the state government now is to explore an exit option from KRCL so that it can use the same money for the development of the region, which in turn, could get new trains and see enhanced infrastructure of railway stations and platforms plus new facilities. 

Recently Dakshina Kannada MP from Karnataka, MP Brijesh Chowta stated that a proposal had already been submitted to the minister of state for railways Somanna so that the merger plan could be expedited and the Karnataka government would be able to exit its stake from the KRCL. 

The KRCL had earlier stated that the Karnataka government needed to provide Rs 9,158 crore for undertaking developmental projects in the state for 5 years. It had also said that if the state government was unable to provide the same, it could evaluate the exit options and relinquish its stake in KRCL to the Indian Railways. The railways have been asking states to either fund the development of the KRCL network in their respective states or exit their stake. Besides Karnataka, only Goa has conveyed its willingness to relinquish its stake in the KRCL. It needs to be seen how fast the exit options come in for the Karnataka government from the KRCL.

If it gets done soon, it will be a great relief for the state government that has been reeling under the financial burden of the poll guarantee schemes. The money from exiting KRCL could then very well be used for the development of the rail infrastructure in the region.