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Rs 18,782-crore hole stares at Suresh Prabhu

Prabhu's ministry intends to invest Rs 856,020 crore ($137 billion) over the next five years to revamp the world's most travelled railway network

Prachi Salve| 

Railway Minister Suresh Prabhu with MoS for Railways Manoj Sinha and Railway Board members giving finishing touches to the Railway Budget 2015-16 in New Delhi on Wednesday February 25, 2015 Picture by Dalip Kumar

“Prabhu, yeh kaise hoga? (God, how will this happen?)”

In droll fashion, that was the rhetorical question Railway Minister Suresh Prabhu posed to himself and God, as he presented the first full railway of the National Democratic Alliance (NDA).

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And well he might.

Prabhu’s ministry intends to invest Rs 856,020 crore ($137 billion) over the next five years to revamp the world’s most travelled railway network–and he intends to do this without any passenger-fare hikes.

For 2015-16, Prabhu intends to spend Rs 100,011 crore, an increase of 52% over the previous year.

Part of the money over this year and the next four, will come from the central government, which, on Thursday, announced Rs 40,000 crore annually as additional finance. The ministry also plans to borrow Rs 17,655 crore from the market, use Rs 17,793 crore from internal resources and get Rs 5,781 crore through private-public partnerships.

This leaves Prabhu with a Rs 18,782-crore hole for this year alone and a task on his hands : to cut costs, raise money and generate profits.

As a first measure to cut costs, Prabhu announced no new trains–the first for a railway minister after many years.

Proposed Investment Plan (2015-2019)
Item Amount (Rs crore)
Network Decongestion (including DFC, Electrification, Doubling including electrification and traffic facilities) 199,320
Network Expansion (including electrification) 193,000
National Projects (North Eastern & Kashmir connectivity projects) 39,000
Safety (Track renewal, bridge works, ROB, RUB and Signalling& Telecom) 127,000
Information Technology / Research 5,000
Rolling Stock (Locomotives, coaches, wagons – production & maintenance) 102,000
Passenger Amenities 12,500
High Speed Rail & Elevated corridor 65,000
Station redevelopment and logistic parks 100,000
Others 13,200
TOTAL 856,020

Source: Indian railways

The minister has set four goals for the transformation of Indian Railways over the next five years:
  • To deliver sustained, measurable improvement in customer experience
  • To make the railway a safer means of travel
  • Expand modernise infrastructure
  • Make the railways financially self-sustaining

The rail has laid out a white paper for railway reform.

The minister informed Parliament that the operating ratio (how much money is spent on day-to-day operations to earn revenues, giving an indication of the funds left for safety and expansion) of Indian Railways would improve from 91.8% in 2014-15 to to 88.5% this year, the best in the last nine years.

The operating ratio of a company is said to be good if it is below 80%. The last time it was below 80% for the Indian Railways was 74.7% in 1963-64.

Let us look at the projected income of Indian Railways for 2015-16.

Estimated Income, 2015-16
heads 2013-14 actuals 2014-15 (BE) 2014-15 (RE) 2015-16(BE)
Total Passenger Receipts 36,532 44,645 43,002 50,175
Goods earnings 93,905 105,770 106,927 121,423
Sundry and other earnings 5,721 5,500 5241 7318
Other coach earnings 3,678 4,200 4,028 4,612
Gross traffic earnings 139,558 160,165 159,248 183,578
Total earnings 139,837 164,374 163,450 188,557

Source: Indian railways; Figures in Rs crore

Passenger receipts are expected to increase 16.7% to Rs 50,175 crore in 2015-16. In 2014-15, passenger receipts declined from the budget estimates. Goods earnings increased 1%, and are estimated to increase 13% in 2015-16.

Estimated Expenditure, 2015-16
Item Actuals 2013-14 Proposed 2014-15 (BE) 2014-15 (RE) 2015-16 (BE)
Ordinary Working Expenses 97,570 112,649 108,970 119,410
Appropriation of Depreciation Reserve Fund 7,900 6,850 7,775 7,900
Appropriation to Pension Fund 24,850 28,550 29,225 34,900
Total working expenses 130,320 143,318 140,141 154,476

Source: Indian railways; Figures in Rs crore

Total working expenses are expected to go up from Rs 130,320 crore in 2013-14 to Rs 154,476 crore in 2015-16, an increase of 18%.

The government has also been able to save on working expenses in the current financial year on account of a drop in prices of high-speed diesel (HSD). is a data-driven, public-interest journalism non-profit

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First Published: Fri, February 27 2015. 13:11 IST