Analysts give mixed reaction on rail budget

Analysts today gave a mixed reaction to the railway budget, with some terming it as a "non-event" saying there were no radical measures to bridge the revenue deficit in the document, and a few calling it "pragmatic" given the limitations.

While E&Y and Nomura analysts described it as 'run of the mill type', PwC India termed the exercise by Rail Minister Pawan Kumar Bansal as pragmatic with focus on the short-term.

Commenting on the rail budget, PwC India Executive Director for capital projects & infrastructure Manish Agarwal said, "I see this as a pragmatic budget, clearly focused on the short-term. The fuel adjustment charge on freight is an economically sensible approach, and the expectation of 3% freight growth recognises the practical implications on further burdening this segment."

Abhaya Agarwal, partner for infrastructure practices at Ernst&Young India, said this was not a growth-inducing and game-changer budget.

"More emphasis on investment and specific roadmap for achieving them was expected from the budget," Agarwal said, adding it only brings lot of cheer to passengers and the staff and not any reforms, as the emphasis is on investment in passenger amenities, skill development and staff welfare.

Nomura India Chief Economist Sonal Varma said the entire exercise has turned out to be largely a "non-event" with the only positive measure being linking freight charge revisions to fuel costs.

Since the Minister left passenger fares unchanged, the operating ratio (expenses/earnings ratio) is expected to improve only marginally to 87.8% in FY14 from 88.8% this fiscal, which itself is much higher than the budgeted target of 84.9%.