Railway Budget 2014-15

Railway Budget 2014-15 -- Focuses on Investments & Expansion

The Railway Budget 2014-15 is inspiring in terms of expansion plans and investments including PPP projects and FDIs. Considering the significance of the sector in propelling the economic growth, it is critical for the Railways itself to be restored to a more central place in the national planning, as Railways are strong engines of development and help mainstreaming our citizens in less developed areas of the country.

Some of the key initiatives have been introduced keeping different sections of society into consideration -- During the XI Plan period, the targets for new lines, doubling and electrification were exceeded. Railways completed 2,207 km of newlines against target of 2,000 km, doubling of 2,758 km against 2,500 km and electrification of 4,556 km against a target of 4,500 km. During the 12^th Five Year Plan period, Indian Railways infrastructure will further expand to reach the hinterland and frontiers of our nation. Extension of rail connectivity to the north-eastern states has been a focus area to bring prosperity to these areas and also strengthen the national integration. Initiatives taken for construction of two dedicated freight corridors on the eastern and western routes would lead to strategically critical capacity augmentation, and would involve construction of dedicated freight lines to carry predominantly coal and steel on the Eastern Corridor and containers on the Western Corridor.

Highlights of Railway Budget Speech 2014-15

• Safety measures-- For the safety of passengers several measures such as portable fire-extinguishers in coaches and induction-based cooking in pantry car, planning for induction of indigenously developed Train Collision Avoidance System (TCAS) over Indian Railways; development of ‘crashworthy’ structural design capable of absorbing high impact loads; provision of Vigilance Control Device (VCD) in all electric and diesel locomotives; comprehensive Fire and Smoke Detection System to be extended to all major passenger trains have been proposed in the Budget.

• Financial Health -- With the continuous support of financial resources of the government for the investment needs of rail infrastructure via Gross Budgetary Support, Internal Generation of Railways and Market Borrowing, the budget proposes to target the private investment in rail infrastructure to bridge the gap.

• Public Private Partnership (PPP) -- Investment in Railways is being stepped up by partnership with the private sector. PPP projects related to rolling stock manufacturing units, modernisation of railway stations, multi-functional complexes, logistics parks, private freight terminal, freight train operations, liberalised wagon investment schemes, and Dedicated Freight Corridors are in the pipeline and offer excellent opportunities for private investment in the 12th Plan. Apart from attracting private investments from domestic investors in rail sector, a proposal is under consideration of the Government to enable Foreign Direct Investment (FDI) to foster creation of world class rail infrastructure. Rail Land Development Authority was set a challenging target of raising Rs 1,000 crore in the Budget 2013-14 and raised Rs 937 crore so far. However, the Budget has not provided any clear cut roadmap for the execution of PPP projects.

• Modernisation and Technology Induction -- Within available resources, Indian Railways have always endeavoured to usher in new technology for modernisation and enhanced delivery to rail users. Dedicated Freight Corridors for exclusive running of heavy haul freight trains, High Speed Trains Project, and Semi-High Speed project are recent initiatives taken in this direction.

• Dedicated Freight Corridor Project -- Implementation of the Eastern and Western Dedicated Freight Corridors project is making good progress with the award of nearly 1,100 km of civil construction contracts till now. During 2014-15, another 1,000 km of civil construction contracts are targeted, besides award of Systems contracts.

• High Speed Trains Project and Semi-High Speed Project -- As agreed between Honourable Prime Ministers of India and Japan in May 2013, a joint Feasibility Study for Mumbai-Ahmedabad High Speed corridor, cofinanced by Indian Railways and Japan International Cooperation Agency (JICA), has started in December 2013, and will be completed in 18 months. For the same corridor, a Business Development study being undertaken by French Railways (SNCF) will be completed by April 2014. After the studies, Indian Railways will decide on further course of action and modalities for implementation of the project. Besides the High Speed project, Indian Railways also intend to explore low cost options for raising speeds to 160-200 kmph on existing select routes like Delhi-Agra and Delhi-Chandigarh.

• Green Initiatives & Passenger Friendly Initiatives -- Besides energy efficiency of rail transport, initiatives to promote use of renewable and clean energy have been part of our approach. The Budget proposed to increase the coverage progressively. While the success of e-booking of tickets has surpassed all expectations and provided a convenient means to our customers to interface with the Railways from the comfort of their homes and offices. The scheme for upgradation of passengers is proposed to be extended to second class sitting, AC Chair car and Executive chair car passengers.

• Demand Management through Dynamic Pricing & Enhancing Market Share - The Budget proposes to expand dynamic pricing of rail fares on larger scale. Railways propose to lay further emphasis on improving its market share through a mix of strategies. These would involve inter alia improved use of assets, including wagon turn round by ensuring improved operation and maintenance practices to enhance asset availability, intensive monitoring and improvement in the condition of freight terminals through result oriented investments, and laying emphasis on completion of various on-going line capacity works on critical sections.

• Rail Tariff Authority -- In a path breaking decision, an independent Rail Tariff Authority is being set-up to advise the government on fixing of fares and freight and also engage with all stake-holders to usher in a new pricing regime through a transparent process.

• Information Technology --Some of the initiatives that would be taken are - proliferation of cash accepting Automatic Ticket Vending Machines; Ticketing on mobile phones in the unreserved segment; PNR status update to passengers through system generated SMS; an update for train running information.

Financial Performance, 2012-13 -- The Rail Budget reports that the freight loading by the Railways at 1,008 million tonnes surpassed the revised target of 1,007 million tonnes. The Operating Ratio achieved was 90.2% in 2012-13 over 94.9% in 2011-12.

Financial Performance, 2013-14 -- The target has been scaled up to about 1052 million tonnes from the budget target of 1047 million tonnes. Considering the trend of passenger earnings, the revised target has been kept at Rs 37,500 crore. The revised plan outlay stands at Rs 59,359 crore. Operating Ratio of Railways is likely to be 90.8% as against budgeted target of 87.8%.

Budget Estimates, 2014-15 -- The freight traffic target is proposed at 1,101 million tonnes, an increment of 49.7 million tonnes over the current year revised target of about 1052 million tonnes.

Annual Plan 2014-15 -- The Annual Plan 2014-15 envisages an investment of Rs. 64,305 crore as against Budget Estimates 2013-14 of Rs. 63,363 crore and Revised Estimates 2013-14 of Rs. 59,359 crore.

Warm regards,

Dr. S P Sharma

Chief Economist