Indian Railway Budget Highlights

  • Published on
    27-Dec-2015

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Indian rail

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  • Finnacle-2014 SDMIMD

    Indian Railway Budget Highlights

    BACKGROUND

    Few interesting figures about Indian Railways

    Indian Railways runs 12167 trains to carry over 23 million passengers per day connecting more than 7172 stations. It is equivalent to moving the entire population of

    Australia.

    More than 7421 freight trains carry about 3 million tonnes of freight every day. Total track length of 1.16 lakh kilometres; 63,870 coaches; more than 2.4 lakh wagons

    and 13.1 lakh employees.

    Monopoly business with 100% sales on advance payment.

    Few reasons for current sad state of Indian Railways

    Slow growth in traffic and high operating ratio (94%) i.e., Indian railways spends 94 paise out of every rupee earned

    The share of public transport has come down from the onetime 65:35 to 30:70 at present Operating surplus of barely Rs 602 Crore for FY 15, it was Rs 11,754 crore in 2007-08 Projects suffer from huge time and cost overrun, just 01 out of 99 new rail projects

    announced in past decade has been completed and 359 projects out of 676 projects

    approved in last 30 year are still pending with their cost doubling to Rs 1,82,000 cr.

    Rs 5 lakh crore needed over next 10 years to complete existing projects. Currently Indian railways faces a cash crunch of Rs. 26000 crore Indian railways carries only 31% of the total freight carried in the country by all modes Passenger fares were kept lower than costs, thus causing loss in the passenger train

    operations. Difference between cost and fares increased from 10 paise per passenger in

    2000-01 to 23 paise in 2012-13

    Above facts suggest that during 10 years of UPA focus was on sanctioning projects rather than

    completing them. When projects drag on indefinitely, the investments are essentially dead

    investments. Populism was preferred over prudence.

    It is unheard of a business that has a monopoly that has nearly 125 crore customer base, that

    has 100% sale on advance payment; but still starve for funds.-DV Sadananda Gowda- Railway

    Minister

  • Finnacle-2014 SDMIMD

    Application of Money- Current Railway Budget 2014

    Passenger amenities and Station Management

    Online booking to support 7,200 tickets per minute Wi-Fi facilities in A1 & A category stations and select train Ready to eat branded food and RO water at stations Cleanliness budget up by 40% and third party quality audit 4000 women constables to improve safety of women Parking cum platform ticket combos through e-booking E-booking of railway retiring rooms Provision of work stations in select train Mechanised laundry for better quality bedrolls Developing identified stations to meet international standards

    Planning and Administrational Reforms

    Separate the railway boards functions of policy formulation and implementation New post of Member infrastructure in the board, who will be in charge of all PPP

    projects and deal with private investors

    Incubation centres to harness new ideas Railway university to train railway staff Project management groups to expedite projects Planned tax holiday scheme that will incentivise investment for railway projects

    that have a long gestation period

    Decision support system for project implementation Strategic partnership and transparency in procurement

    Major Decisions

    Opening up of the system to overseas investor Diamond quadrilateral high-speed rail network Feasibility study for bullet train between Mumbai and Ahmedabad Connectivity to new and upcoming ports through PPP Private freight terminal on PPP model Programmes to facilitate procurement of parcel vans and rakes by private parties,

    special milk tanker, increased movement of fruits and vegetables in partnership with

    warehousing corporation

    100 crores for strategic railway line in border area for defence Discount under empty flow wagon policy Up to 5% biodiesel use Development of loco coaches and wagon leasing market Target to become largest freight carrier in the world Eco tourism and education tourism in north eastern states Golden quadrilateral network- Rs 9 lakh crore Bullet train- Rs 60,000 crore 359 incomplete projects Rs 1.82 lakh crore

  • Finnacle-2014 SDMIMD

    Proposed Sources of Money

    The budget proposes to attract private domestic funding in infrastructure projects. Public-Private partnership Proposal to allow up to 100% FDI in elevated rail corridor project, freight terminals

    and sub urban corridors for connectivity to ports and mines

    The recent fare revision will bring Indian Railways an additional revenue of about Rs 8,000 crores

    Leveraging railway PSU resources i.e surplus funds of railway PSUS to be invested in infrastructure projects of railways

    Impact

    It is expected that FDI influx in the sector can add up to 1.5 percentage points to Indias GDP

    Freight loading to rise from 50 million tonnes to 1,101 million tonnes Bullet train would help to prevent exodus Enhanced passenger experience Tourism sector will get a great boost

    CONCLUSION

    The rail budget though has some limitations but it is a visionary statement to put railways on

    fast track. The focus seems to be on consolidation as not many new projects have been

    announced. Speed today is a symbol of progress and the government has done well to accord

    high priority to the introduction of fast trains which will add momentum to trade and industry

    and also would help to decongest cities as movement of people would be easier and faster. The

    diamond quadrilateral network will be the pace setter for rejuvenation of Indian railways. The

    focus on dedicated freight corridor and laying of new tracks will metamorphose the rail

    movement. The three big messages are- Consolidation, Limited Populism and Expansion

    largely with private investment.

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