Rail Budget 2016 is a balance between growth, operation efficiency, says India Inc

Hails the new freight corridors, direct long term freight negotiations with key partners

Corporates have hailed the Railway Budget, saying freight corridors, long-term freight negotiations, container trains and connectivity to ports will go a long way to create a railway network of global standards.

“The Budget signals to the world that we have competent hands at the controls (of the Railways). The Railways are a microcosm of India, and making the budget is just as complex. But the minister appears to have done his homework,” said Anand Mahindra, chairman of Mahindra & Mahindra.

CEOs said the Railway Budget was customer-centric, both for passengers and industry. “It is seeking to enhance the competitiveness of the railways for goods traffic through announcements of review of the freight tariff structure and direct long-term freight negotiations with key partners. It is a win-win for industry and the railways,” said Debu Bhattacharya, managing director of Hindalco and vice-chairman of Novelis. Hindalco is one of the key customers of the Indian Railways.

Ramesh Maheshwari, executive vice-chairman, Texmaco Rail & Engineering,  which supplies equipment to the Railways, said the Budget was clearly aimed at strengthening infrastructure and leveraging technology for all-round growth.  Texmaco Rail and its subsidiaries, Kalindee and Bright Power, will be significant beneficiaries of the thrust in the budget on commissioning new tracks and increased outlay on electrification.  

“The minister must be complimented for his aggressive bid to reclaim the freight market through a series of measures, including a logistics push, new freight policies and a full-fledged market study for expanding the freight basket. The planned progressive utilisation of 25 tonnes axle load wagons (up from 22.9 tonnes) will increase throughput and materially contribute to the economy of operations,” he said.

The opening up of leasing of general purpose wagons will substantially benefit the wagon industry and users, especially companies like Texmaco, which has entered lease financing in a venture with a French company.

Business chambers also lauded Prabhu’s focus on the big picture during an economic slowdown. “If every other sector is reporting tepid growth, the Railways cannot be expected to be an exception. The 10 per cent  revenue growth projections are realistic, although he is banking on revival of growth in key sectors,” said Assocham President Sunil Kanoria.

Increased involvement of the private sector for upgrading of stations and freight movement was welcomed. “Besides, the plan to diversify his revenue source beyond the present narrow basket of a few commodities is timely,” he added.

FICCI President Harshavardhan Neotia said the rationalisation of the freight policy and review of the  public-private partnership policy would draw private investment. “All procurement, including procurement of works, has moved to an e-platform. And the process of conducting recruitments online will be extended to all positions. These initiatives are important and in line with Prime Minister’s Digital India programme,” Neotia said.

The freight corridor project, which is the largest infrastructure project in the country, is the most important. Contracts worth Rs 24,000 crore have been awarded during Prabhu’s tenure. “Not only will the corridor help in saving logistics costs, it will help the private sector explore immense business opportunities during the rollout,” said Sumit Mazumder, president of CII.

East India, which is plagued by poor connectivity, will benefit from the Kharagpur-Mumbai and  Kharagpur-Vijayawada corridors. Waterways, roads and coastal shipping are not adequate in this part of the country and the problem could be addressed by the rail freight corridor. Among key misses, last year’s announcement of a five-year investment plan of Rs 9 lakh crore did not find any mention in Prabhu’s speech.