Financial Advisor: Freight corridor

Friday, February 27, 2015

Short Review of Railway Budget 2015-16

Review of Railway Budget 2015-16

This railway budget seems to focus on improve passenger’s commuting experience and at the same time gives a signal for investments thrust. It proposes an annual plan of Rs 1 lakh crore with support from central government of budget allocation, market borrowing, internal resources and institutional investments. The highlights of railway budget are given below:

(A) There is no hike in passenger’s fares this time. The railway minister’s statements range from additional wagons to accommodate more passengers to improving security with equal importance of cleanliness indicates the government’s intention to improve the commuting experience. Only time will tell whether these promises fulfilled or get blocked due to lack of funds investment.

(B) The revised operating ratio for this year was 91.8%. Railway Minister Suresh Prabhu has set an ambitious operating ratio of 88.5% for the financial year 2015-16. The operating ratio is the amount that the railway has to spend to earn Rs 100. A lower operating ratio helps to improve passenger amenities and creating long term assets. The proposed operating ratio will be the best in the last nine years. Lower diesel prices will certainly help to keep lower the operational ratio.

(C) The government has proposed to hike the freight rate with effect of 1st April 2015. It will increase freight earnings by 13.6% in FY 2015-16.

(D) The focus on expansion of railway’s capacity over the next five years by increasing in daily passenger carrying capacity from 21mn to30mn, increase in track length by 20% from 1,14,000 Km to 1,38,000 Km and also the rise in freight-carrying capacity 1bn to 1.5bn ton.

(E) There are much attention to modernization of infrastructure at railway stations, signaling and electrification works, coaches and wagons. A great attention has given to dedicated freight corridor projects which can benefit many railway equipment suppliers.

(F) ABB, BHEL, KEC International, L&T, BEML, SIEMENS, Kalindee Rail Nirman, Texmaco and Titagarh Wagons may get benefited from this year budget proposals.

Overall, the railway budget for 2015-16 showed its thrust towards investments.

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Tuesday, July 8, 2014

Railway Budget – 2014: Key Points

Railway Budget – 2014: Key Points

Bullet trains: The Railway Minister proposed introduction of bullet trains between Mumbai and Ahmedabad. He also proposed setting up of Diamond Quadrilateral Network of high-speed trains connecting major metros and growth centers.

High-speed trains: Railways plans to increase speed of trains to 160-200 km per hour in nine select sectors: Delhi-Agra, Delhi-Chandigarh, Nagpur-Bilaspur, Goa-Mumbai, Chennai-Hyderabad, Delhi-Kanpur, Delhi-Pathankot, Mysore-Bangalore-Chennai, and Nagpur-Secundrabad.

FDI in Railways: To mobilise resources for infrastructure upgradation and high-speed trains, the minister said it would seek Cabinet approval for foreign direct investment (FDI) in building rail infrastructure. He however said FDI would not be allowed in railway operations.

Periodic hike in rail fares: Though Mr Gowda did not announce any fare hikes, he said periodic revision in passenger fare and freight rates will be linked to revisions in fuel prices in order to insulate the Railway revenues from fuel cost escalation. In his post-budget briefing, Mr Gowda said the Railways would continue with the Fuel Adjustment Costs (FAC) formula under which there will be periodic hike in fares and freight rates once in six months, if there is a hike in fuel cost.

Wi-Fi in select trains and stations: To improve passenger convenience, the Railways will provide Wi-Fi services in A1 and A category stations and in select trains. Besides that platform and unreserved tickets can also be bought through internet.

Improvement in e-ticketing services: Railway e-ticketing services will be improved to support 7,200 tickets per minute and allow 1.2 lakh simultaneous users.

Better cleanliness: To improve cleanliness measures, the minister provided a 40 per cent higher allocation and proposed outsourcing of cleanliness services at 50 major stations. He also said onboard housekeeping would be extended to more trains and CCTVs would be utilized to monitor stations' cleanliness.

Pre-cooked food: The Railways will introduce pre-cooked and "ready-to-eat meals of reputed brands" on trains across the country. In addition to providing filtered (RO) drinking water on trains and at stations, the minister vowed strict action, including the cancellation of contracts, for any vendors who are found supplying unhygienic food to passengers.

New trains: Railways proposes to introduce 58 new trains including five Jansadharan trains, five premium Trains, six AC express trains, and 27 express trains. (See list of trains)

Dedicated freight corridor projects: For eastern (Ludhiana, Punjab, to Dankuni, West Bengal) and western (Mumbai-Delhi) dedicated freight corridor projects, the Railways will target awarding of construction contracts for nearly 1,000 km this year.

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