Suresh Prabhu attempts a crowd-pleaser railway budget

5 reasons why Prabhu has attempted to please all- industry, passengers and experts

Don't want to miss the best from Business Standard?

Railways Minister Suresh Prabhu sounded upbeat through his Budget speech, which seemed to be a crowd-pleaser with something for everyone. Industry is likely to be enthused by the announcement of more locomotive factories, greater broad-gauging of tracks, more rail track, dedicated freight corridors and electrifications – all of which will create new demand points. Passengers will be glad at the lack of any passenger fare hikes, while transporters and industry also didn’t get hit by freight rate hikes. Prabhu also announced better services and employee benefits.

Here’s a quick look at the key numbers and announcements.
 
1)      No Passenger Fare Hikes: In a remarkable feat of financial balancing, Railways Minister Suresh Prabhu on Thursday left passenger fares in both long distance and suburban trains untouched. While this will come as a relief to passengers, it is not immediately clear whether the Minister will be able to meet revenue targets. As he himself admitted, the Railways is also bearing the brunt of a global slowdown and a massive payout in salaries due to the 7th pay commission recommendations.

 

2)      Operating Ratio: The minister is targeting an operating ratio of 92% for the fiscal year 2017, up from 90% for the current fiscal. While Prabhu has promised this despite absorption of Seventh Pay Commission guidelines, it remains to be seen how he manages, particularly given no hike in passenger fare prices.
 
3)      Capital expenditure: 2016-17 capex at Rs. 1.21 lakh crore; implementation of projects to be done through JVs with states, developing new frameworks for public-private partnerships. What will help more efficient usage of capital is the move to a paperless contracting model that will provide greater transparency in tendering and allotment of contracts, as well as reduced production cycle.

 
4)      Dedicated freight corridors: At least 3 three new freight corridors to be developed on a priority basis. Given slowdown in economy, Prabhu says needs to build more DFCs, which offer smoother movement of goods on designated routes. Has proposed north-south Delhi-Chennai DFC; east-west Kharagpur to Mumbai; and east coast Kharagpur to Vijaywada. The east coast corridor is an important model to look at since it enhances ports connectivity.
 
5)      Expansion Projects: The minister announced a slew of new projects, including more electrification and broad-gauging. Prabhu says the ministry will commission 2,500 km of broad-gauge lines, and electrification of 2,000 km in FY17, the outlay for which has increased by 50%. An additional 2,800 km of track will be commissioned. Broad gauge lines will be commissioned at the rate of @ over 7 km per day against an average of about 4.3 km per day in the last 6 years.  This is expected to grow to about 13 km a day in 2017-18 and 19 km daily in 2018-19. The new projects are expected to generate employment of about 9 crore man days in 2017-18 and 14 crore man days in 2018-19.