Indian Railway Budget Highlights

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    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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