UPDATE 3-India says private funds will help rail system, but gives no details

Tue Jul 8, 2014 9:01am EDT
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* Modi's government to seek approval for FDI in sector

* Government expects $1 bln private-public investment this fiscal year

* India's giant railway system is slow, congested

* Opposition party launches protests (Adds details on protests, borrowing, updates shares)

By Tommy Wilkes

NEW DELHI, July 8 (Reuters) - Indian Prime Minister Narendra Modi's government disappointed markets with its first major economic policy statement on Tuesday, promising to seek foreign and private funding for the railways but giving no details of how it would lure investors.

Investors had harboured expectations for Modi's government to use the railways budget - which precedes the full federal budget by two days - to detail widespread reform.

India's state-owned railways are the fourth-largest in the world. They have suffered from years of low investment and populist policies that have kept fares low.

But that has turned a once-mighty system into a slow, badly-congested network that crimps economic growth.   Continued...