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.