The Asian Development Bank (ADB) has signed an agreement with the Government of India to provide a loan worth $150m to enhance rail freight services and passenger transport routes.
The loan, forming part of the $1.14bn Railway Sector Investment Program, and will help the country improve rail services across some of its busiest freight and passenger transport routes.
The investment programme will double the tracks along 840km of rail routes and electrify a further 640kmof rail.
The ADB loan will also be used to enhance the operational and financial efficiency of Indian Railways, as well as the installation of new signaling systems across the rail network.
The new railway programme will help trim down fuel consumption, enhance energy efficiency, reduce pollution, improve railway safety and increase line capacity as well as include new financing modalities.
Of the total $1.14bn programme, $500m will be provided by ADB in four installments, while the remaining $644.6m will be contributed by the Indian government.
The first installment, worth $343.4m, includes the $150m loan from ADB and $193.4m from the Government of India.
Joint Secretary Venu Rajamony, Ministry of Finance Department of Economic Affairs, said that although railways make up a significant part of India's transport sector, constraints on high density railway routes present a chronic challenge.
"This programme should improve energy efficiency, safety, reliability, affordability, and environmental sustainability along key railway routes with heavy traffic," Rajamony said.
In order to promote sustainable transport in the country, ADB will provide $300,000 in technical assistance, which will help in shifting bulk good transport from road to rail, reducing carbon emissions.