Rail Budget Hallmarks: Execution, Modernisation,
Capex
The Modi government’s 2nd railway budget reiterated its transformational/aspirational
thematics, with emphasis on modernisation across the board, and its hallmark of
execution.
The tone of this budget was energetic and futuristic. And
for the first time ever, it had an implementation report at annexure 2, based
on promises made last year- 139 of which are at different stages of
implementation.
The 2016 budget unveiled some new types of trains: fully
unreserved, air-conditioned all 3 tier ones, those that will travel at 130
km/hour or faster, with newly designed coaches, double-decker trains that can
carry 40% more people.
The strategic departure is in how the railway is rapidly
connecting the North East, with broad gauge trains to Mizoram and Manipur.
Freight, the cash cow of the railways, will be enhanced with
25 tonne axle-load wagons, and the urgent implementation of the first two of
the freight corridors by 2019, with access from at least 100 private sidings,
RoRo technology, and a drive to recapture its dwindling market-share.
There is a plan to connect ports and highways to trains, a Diamond
Quadrilateral to complement the Golden Quadrilateral. Also, an auto-hub is
coming up in Chennai to help transport cars.
Two new locomotive factories in Bihar will be built soon.
The electrification budget is up 50% , and 2,000 km of track will go electric
in 2016-17, alongside another 2,800 km of new track laying.
Prabhu announced a stretched revenue target of Rs 1.85 lakh
crores for 2016-17. And this, to be
delivered via an operating ratio of 92%, up from 90% presently. This ratio is
up slightly to allow for the awards of the 7th Pay Commission, an
additional Rs. 28,450 crores, for the 2.6 million railway employees and
pensioners.
The minister plans to revamp the workings of the
bureaucratic Railway Board to improve implementation and wants to introduce
zero based budgeting.
Over the last year, the railways have not been able to
achieve its freight revenue targets, but this was largely offset via
operational savings and lower fuel bills.
But still, the ministry does have some momentum: over the last
year, 44 new projects, worth Rs. 28,000 crores, were awarded, compared to just
Rs. 13,000 in aggregate in the previous six years prior.
Prabhu continues the modernisation drive here, with a
capital expenditure budget of Rs. 1.21 lakh crores, up 20% , and more than
double the average of Rs. 48,000 crores
annually, in the UPA years.
This capital expenditure is the key ingredient to the
revival strategy for the Railways, announced as part of the Rs.8.8 lakh crores
to be spent over five years. But to kick in Rs. 2 lakh crore each for the
remaining three years of this government’s tenure may be daunting, unless, of
course, new revenue streams are found.
The government will provide Rs. 40,000 crores towards this
year’s capex, again, as it did last year. A financial investment from LIC has
also been secured for Rs. 1.5 lakh crores, albeit disbursable over 5 years, but
at excellent terms, per the minister.
The minister also indicated that a concerted effort will be
made to realise at least 20% of future revenues from non-tariff sources such as
advertising on railway property/stations, and judicious monetisation of railway
land in innovative ways. Comparable railway networks abroad do obtain about 30%
of their income from non-tariff sources.
For the first time, the Indian Railways is also actively
seeking collaboration with the various states, and while 17 states have shown
interest, 6 MOU’s have already been signed.
The bullet train from Mumbai to Ahmedabad, with Japanese
involvement, was also mentioned, as a force-multiplier, and in terms of technology,
know-how, and skill development.
Prabhu plans to build bio-toilets on every train, (up from
the 17,000 already done), do away with dangerous unmanned crossings altogether,
renovate over 400 stations, vastly improve cleanliness, introduce wi-fi,
e-ticketing, FM radio, wheel chairs, hand-held ticketing, phoned in cancellations,
dustbins, CCTV coverage, better class catering etc.
Speeds will increase all around; freight up to 50km/hour and
express trains up to a minimum of 80 km/hour. The Railways will be integrated
with other modes of transport. Its extensive data mining might be monetised too.
There will be two elevated suburban corridors created in Mumbai, and other city metro networks will
expand too.
But all in all, much of this is not news. Competent,
path-breaking, and far- reaching as this budget in series is; and most commentators
are giving it 7 points on 10, there were no out-of-the-box surprises.
For: The Quint
(749 words)
February 25th, 2016
Gautam Mukherjee
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