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Rail budget 2015: Prabhu's big spending push ends investment drought

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Rail budget 2015: Prabhu's big spending push ends investment drought - Firstpost

Suresh Prabhu has produced a Rail Budget for 2015-16 that is designed to make the Indian Railways one of the key drivers of the India Growth Story over the five-year term of the Narendra Modi government. With the first year more or less gone, Prabhu has four years to deliver.

He is planning to do this by dramatically increasing investments in freight and passenger capacity, including safety and speed. He wants to expand passenger capacity by 43 percent to 30 million daily; increase track length by 20 percent; and boost freight handling capacity by 50 percent to 1.5 billion tonnes.

It’s about making the Indian Railways a third larger in just one term of office of the NDA government.

Prabhu underlined his serious intent by proposing a sharp push-up in plan expenditure by 52 percent in 2015-16 to Rs 1,00,011 crore. The centre is footing 41.6 percent of this bill, internal profit generation will yield 17.8 percent. The rest will come from borrowings and unconventional sources, including equity contributions from states keen on enhancing their own rail infrastructure.

The higher investment requirements will be met – at least this year – not through an increase in passenger fares, but higher freight that was not really mentioned in Prabhu’s speech. The fine print suggests that Prabhu will be raising more freight revenues not through a general increase in goods carriage tariffs, but by subtly reclassifying cargo categories and distance slabs to generate more revenues from the same basic freight rates. Smart.

The breast-beating will begin later, when railway shippers realise whom these reclassifications will bite.

But the larger message of Prabhu’s rail budget speech is simple. It is a statement of intent by the Narendra Modi government that it will kickstart growth through higher public investment. Prabhu has delivered a part of that promise by raising his plan spends. Prabhu has delivered a slight increase in plan spends for 2014-15 as well – 0.5 percent more than budgeted at Rs 65,798 crore despite a half percentage point drop in gross traffic receipts at Rs 1,60,165 crore over budget estimates.

Despite this, Prabhu has produced a surplus of Rs 7,279 crore after increasing appropriations for the pension fund and depreciation, thanks to lower fuel prices and “better financial management.”

For 2015-16, Prabhu has proposed a significant increase of 16.7 percent in passenger traffic and an 85 million tonne hike in freight traffic, to generate gross traffic receipts of Rs 1,83,578 crore – up 15.3 percent from 2014-15.

Given that this year he may miss his freight traffic numbers (Prabhu had hit 73 percent of his revised target till December 2014), it is anybody’s guess whether Prabhu will be able to significantly improve on his performance next year, when freight rates will be higher for many users. But higher freight rates gave him higher revenues of 14 percent in 2014-15; next year should be no different, especially if the economy starts turning around.

But the real message of Prabhu’s message goes beyond the numbers. There are both political and economic signals emanating from it.

First, the Indian Railways plan to become more consumer-focused, both towards passengers and freight customers. This is apparent from the number of passenger amenities Prabhu announced, including better food, cleaner toilets, better safety and security, better stations, more coaches per train, etc. For freight customers, the promise is speed, better logistics handling capacity, freight rebates for areas with low loading potential, and a revamped private freight terminal policy, among other things.

Second, the railways will invest heavily to boost both their own revenues, and the country’s growth. The cycle of underinvestment in the railways is coming to an end. A four-year investment plan, co-terminous with the NDA government’s tenure till 2019, proposes investments of Rs 8,56,020 crore, the bulk of it for network decongestion and expansion (over Rs 3,92,000 crore between them), and significant investments in safety, rolling stock, and station redevelopment (all above Rs 1,00,000 crore each). High-speed rail and elevated corridor gets Rs 65,000 crore.

Third, resources will be generated for growth and investment both through support from the general budget, and new borrowings, especially from pension funds and insurance companies which have a longer-term horizon. Prabhu said that he expected more money to be raised through market borrowings, leveraging the balance-sheets of the railway production units (coach, wagon and engine building units, among others), and contributions by state governments to equity in projects where they are expected to partner with the railways.

Fourth, formal populism has been abandoned and reform and rejuvenation are the way forward. For what may be the first time ever, no new railway lines or trains were announced. The focus was entirely on upgrading existing infrastructure by increasing the carrying capacity of existing lines through gauge and track changes, doubling or quadrupling lines on key routes, increasing electrification, raising average train speeds, and completing projects that were in their final stages. Politicians may not appreciate this attention to detail, but management gurus would. Past, present and future investments are being made more productive.

Fifth, it is crystal clear that Modi has no thoughts about tinkering in any way with the ownership of the railways. There is no move to corporatise the railways, nor is there any major talk of privatising the core operations of train or wagon operations. At best, private partnerships will be invited in ancillary activities like station improvements, wagon purchases, and logistics.

Prabhu’s is a technocrat’s budget, driven by the need to push investments and set the finances of the organisation right over a medium-term timeframe and make the system self-financing. And yes, Modi wants the railways to be an important engine of growth.
It is part of dream that modi has been selling for last 9 months with no real work on the ground.

the first step of covering up and lack of transparency regarding actual numbers has been put in place.

the plans Prabhu is talking about is for next govt which will get ready made paper plans which are brain child of some officials of rail ministry.

our babus are always ready to prepare speeches for ministers which sound nice for delivery with minimum accountabilty for themselves.

the budget exercise is not to be taken seriously.
Railway Budjet - major announcements made by Railway Minister Suresh Prabhu.

Missed the presentation of this year's Railway Budget? Here's a quick recap of all major announcements made by Railway Minister Suresh Prabhu.

The key themes of the Budget were in line with Prime Minister Narendra Modi's initiatives - Swachch Bharat Mission, Make in India and Digital India.

1The most-expected part about this year's Railway Budget - there is no increase in passsenger rail fares.
2 Rs.8.5 lakh crore will be invested in Railways in next 5 years.
3'Operation 5 mins', wherein passengers travellling unreserved can purchase a ticket in 5 minutes.
4Bio toilets and airplane-type vaccum toilets in trains.
5Surveillance cameras in select coaches and ladies compartments for women's safety without compromising on privacy.
6Rail tickets can now be booked 120 days in advance.
7Speed on nine railway corridors to go up to 200 km per hour.
8Wi-Fi in more stations, mobile phone charging facilities in all train compartments.
9Facility of online booking of wheelchair for senior citizens.
10Satellite railway terminals in major cities.
11Centrally managed Rail Display Network is expected to be introduced in over 2K stations over the next 2 years.
12All india 24/7 helpline - 138 from March 2015 ; Toll free No.182 for security.
13917 road under-bridges and over-bridges to be constructed to replace 3,438 railway crossings; at a cost of Rs. 6,581 crore.
14Four Railway Research Centres to start in four universities.
15Details about new trains and increased frequency will be announced later in this session of Parliament after review.
Highlights of Railway Budget 2015 - The Hindu
For the first time in Indian parliamentary history, to my mind, no Railway budget was presented. It was only a budget speech by the Railway Minister with a statement of intended, pipe dreams. In normal circumstances, a budget must have a vision, a policy, destinations, and achievable targets with timelines. Unfortunately, none of this found mention in Mr. Suresh Prabhu’s speech. And, Mr. Prabhu has left the road map and achievability to “Prabhu”, God, Ishwar, call it by any name or faith!

A Railway budget is essentially a huge opportunity for any government to push forward GDP growth by at least 2.5 per cent. So, this government, in its second budget, has lost the opportunity again. There was huge expectation not only in India, but also across the world for a completely new orientation and a path-breaking budget from this government and Mr. Prabhu in particular. For a government which has come to power with such a thumping majority and promises of “Achhe Din”, these expectations were not unfounded. It’s been a big disappointment, to say the least.

Dreams without a vision - The Hindu

Prabhu unveiled an ambitious five-year investment plan which is expected to utilise Rs 8.5 lakh crore. The critical question is, where will the money come from? Presently, railways depend primarily on the finance ministry. Prabhu has managed to get Rs 40,000 crore from the general budget for 2015-16, an increase of over 30%. It’s unlikely to keep increasing at this rate. The best option is to bring in more private investment in areas such as the planned station redevelopment projects. It’s in this context the promise of a new institutional mechanism is welcome. Unless there is a credible regulator at arm’s length who mediates between private investors and railways, attracting private and foreign investments will prove difficult.
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If prabhu can achieve

1.Speeding up trains without accidents[it is his intent to increase to 160-200km /hr]. Speeding up was tried during emergency . it was stopped after accidents in premier trains including tamilnadu express. it was founfd that speeding of passenger trains was at the cost of freight traffic.lol

2. Increasing of booking time to 120 days. [they used to increase it to 90 days during the summer season]. prabhu thinks it will stop touts from blocking seats.
touts are smart . they know which trains to block selectively irrespective of period. I will tell you one -mayiladuthurai exp. from mysore to mayilduthurai.
irrespective of date it is always blocked. there is a bus lobby which prevents people taking this train from bangalore/mysore to interior tamilnadu.
on date of travel .the blocked seats are sold at a premium by some ticket collectors

3. Increasing General compartments. to four in each train . A welcome move. but he has to ensure ticket are available at kiosk with name of passenger and seat number in promised five minutes . that will stop over crowding in train . the general cpmpartment can be made AC. why rich alone should get this facility

4 . reserving middle berths for ladies is stupid. no lady would like to get wedged between males in lower and higher berth . they woyuld be better off in lower or top berth.senior citizen would welcome lower berth increase proposed.

5. improvement of facilities such as wifi is elitist. people want decent toilets, clean water and linen.perhaps food which would not hurt them.these remain dreams
for the common man

6 if he can improve the operating ratio to 88 as he is proposing in 1 year it is commendable.railways finances are in shambles with ratios aroud 92-95
. the general cpmpartment can be made AC. why rich alone should get this facility

reserving middle berths for ladies is stupid. no lady would like to get wedged between males in lower and higher berth . they woyuld be better off in lower or top berth.senior citizen would welcome lower berth increase proposed.

Krish Ji,

Making all general compartments as A.C.???

Is it feasible by the Railways which is already suffering under financial crisis.

I think the general public has to wait for his turn of ‘Ache din’ at least for another two hundred years to get his dream of traveling in an Air-conditioned general compartment materialized.

All that the traveling general public craves for is a comfortable journey without rat nuisance,
quality food, potable water, neat toilet and above all, standard and safety. I think this is not too much of expectation for the public who pays for every ticket through his nose. Let the Members don’t jump over to compare Railways with Private operators to cite the reasonable cost of tickets.

What is the accountability for the accidents that are being taking place now and then?

When there is no competition how will the railways is expected to improve its standard and service?

When are they going the execute the already sanctioned projects by the earlier Government? Some are half way through and some are in the cold storage.

Hope there won’t be any corruption at least and to determine this, we will have to wait for some more time and see.

How long they expect the general public to wait? Does he waited in ‘Q’ while exercising his franchise , only to wait to get his dreams materialized after several decades?

I think we can improve the railways only if we abolish its monopoly, like that of Insurance, airlines, broadcasting and telecom sectors - just my five cents.
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Clean and good food including Modi Ka chai! Sure you have seen the Kitchen Toilet and water refilling of Railways on TV!!

Achaye Din Aaya!

Modi ka Chaya!!

Prabhu ki Maya!!!


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For the first time the govt has evolved from presenting an account budget - receipt, expenses, deficit, to a vision budget. The minister has made it clear that it is neither possible or fair to expect budgetary support from finance ministry. Railways will look for and explore outside innovative finance. He has also indicated who is interested.
Railways are basically close to bankruptcy. their finances are in shambles . if opertaing ratio which is arond 92 percent , even it is brought down to 88 percent will provide 12 percent revenue collection for spending on facilities or projects.multilateral or bilateral institutions will not invest based on prabhus dreams..

good customer experience is limited to rajdhani exp. and shatabdi. poor struggle to get a seat/berth and travel in inhuman conditions

safety standards are low and committee recommendations set up by govt lie without anyone seeing it

the trains between metros of golden quadrilateral and and diagonal connecting 4 metros generate half the revenue and and are about .20 percent of total routes.

fast tracking -doubling or tripling for these routes is a dream which will take several years to implement.

the existing projects require 96000 crores

to get operations in order requires upgrading signalling system, better safety systems,having electrical traction with cheap power and better technology .better asset and manpower utilisation. fast trains on existing tracks is a dream . one can only marginally increase speed on existing tracks without risking accidents

freight traffic is only 35 percent of total ,the balance is served by roads. they do not have plans to increase it substantially.

add to it the pension , depreciation provisioning and a seventh pay commission in near future makes the future very bleak for railways

the budget is only a dream . it will turn a nightmare haunting the modi govt.
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