The finance ministry has turned down Railway Minister Lalu Prasads proposal to set up a coach factory at Rae Bareli, the constituency of Congress President Sonia Gandhi.
In addition, the ministry has also questioned the plan to manufacture diesel locomotives at a new manufacturing facility at Chapra, Prasads constituency.
Setting up a third coach factory at Rae Bareli is not financially viable, as the railways already have two factories in Chennai and Kapurthala, which at present produce 2,300 coaches annually and will be able to meet the demand of nearly 4,550 coaches by the end of the Eleventh Five-Year Plan, a government source said.
An investment of Rs 1,685 crore is envisaged for the Rae Bareli factory, which aims to manufacture 1,150 state-of-the-art passenger coaches every year. In fact, the railway ministry did not agree to set up the project under the public-private partnership route.
The finance ministrys rejection comes in the backdrop of the Kapurthala coach factory proposing to invest Rs 55 crore to hike capacity by 40 per cent.