No big-ticket announcements likely in Railway Budget

Budget is likely to focus on infrastructure creation in the north-east and improving amenities such as introduction of vacuum toilets

The Narendra Modi government’s first full-fledged railway budget to be announced on February 26 could be a muted exercise with no big-ticket announcements of new projects or railway lines, as has been the practice. Rationalisation of passenger fares or freight rates is also unlikely, according to sources.

However, what is likely is a focus on infrastructure creation in the northeast and improving passenger amenities such as introduction of vacuum toilets and dedicated freight services for farmers. The new railway minister, Suresh Prabhakar Prabhu, will lay greater emphasis on early and timely completion of all big existing projects rather than on new announcements.

According to officials who are part of this year’s budget preparations, the minister, who has a reputation for being a doer, might not tinker with fares or freight rates. A committee headed by D K Mittal, former secretary, financial services, has recommended an increase of two-paise per km in passenger fare. “The main thrust will be to increase the share of railways in the overall freight traffic, which is sliding at a fast rate,” said a senior official, who participated in some of the pre-Budget discussions.

The Railway Budget will not have announcements of too many new lines or projects - as is done every year based on political considerations - said another senior official from the rail ministry, who did not wish to be named. “These projects become an economic liability on us. So this time, the ministry is not entertaining specific requests for rail lines from members of Parliament (MPs),” he added.

The first official said a key focus area in the coming railway budget could be infrastructure creation in north-eastern parts of the country, where a large number of projects are due for completion or about to take off in states such as Meghalaya and Mizoram.

Prime Minister Modi had, during a tour to the north-eastern states in December 2014, announced Central funding for new railway lines in the region. “This is the best destination for tourists. But for that we require connectivity. For the development of this area and tourism, Rs 28,000 crore will be provided for a new railway-line project and 14 new railway lines,” he had said.

According to officials, the overall thrust of the budget could also be on exploring and listing alternative sources of funding for the Indian Railways as the current traditional sources of non-Budgetary support including Indian Railways Finance Corporation bonds have been found to be inadequate.

The rail ministry has already decided to tap foreign pension funds as part of its resource mobilisation plan to bail out the Railways from its financial woes. “We will invite foreign pension funds to invest in Indian Railways. This could be in the form of loans at a cheaper rate. We have to bring in investments both from within and outside the country,” Prabhu had said last month.

Prabhu, who took over as railway minister from Sadananda Gowda on November 10, 2014, will present his maiden rail budget in Parliament at a time the transporter is facing cost overruns to the tune of Rs 1.11 lakh crore across 288 projects, Rs 30,000 crore (Rs 300 billion) annual losses on passenger service that is cross-subsidised with freight resulting into loss of freight market share; rising expenditure on fuel and pay for employees, dip in passenger volumes, slow progress of private-public partnership (PPP) projects and a lack of upgradation of infrastructure leading to accidents.

Gowda, while presenting the railway budget in July 2014, had not touched fares but promised a turnaround through infusion of private investment and monetising railways’ vast land assets. Gowda’s budget also had fewer populist measures than other ministers in the past. The number of new trains announced was also the lowest in several years.

What's on track

Fare rationalisation unlikely, but innovative measures for raising funds in the works

Mega focus and funding for northeast to boost connectivity

Passenger amenities including, bio-toilets and dedicated lines and infrastructure for perishables, to get boost