Indian Railways’ capital investments rose 19% to Rs 1.12 lakh crore in 2016-17. Coming as it does on top of a steep and unprecedented 59% surge in capex in the previous year, the transporter has indeed helped the economy’s investment rate improve marginally from the third quarter of last fiscal. PSUs and some other government undertakings like the National Highways Authority of India have been the other players which have salvaged the investment climate, vitiated by a prolonged sluggishness in private investment.
IR met 92% of the 2016-17 capex target as it undertook significant expansion of tracks, traffic facilities, passenger amenities and electrification. It was the biggest investor among PSUs and other government outfits, followed by NHAI at Rs 53,800 crore.
The spurt in the railways’ investment, after years of stagnation, came when the Narendra Modi government gave a big boost to the carrier’s capex at Rs 93,520 crore in 2015-16, relying heavily on extra-budgetary resources. The overall capex boost by the Centre helped economy grow by 7.9% in that year despite headwinds to growth.
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“Achievement of over 90% of the capex target is creditable, especially since this is after the huge increases in targets over the last couple of years,” said former Railway Board chairman Arunendra Kumar. The national carrier has already announced a Rs 8.56-lakh crore investment plan over the five years ending 2019-20. Apart from budgetary resources and internal generation funds through institutional financing, public-private partnership and debt form part of the investment plan. In its three-year proposed action plan unveiled recently, NITI Aayog has said budgetary support to the railways should be increased to Rs 1,18,768 crore by 2019-20 from the current level of around Rs 40,000 crore to give boost to the country’s transportation system. IR network registered 1,140 billion passenger km in 2014-15, the highest in the world.
However, the operating ratio — paise spent to earn a rupee — hit the worst in 16 years in 2016-17 at 97. Robust PSU/departmental investments coupled with increased capital spending by state governments give credence to the Central Statistics Office’s estimate that gross fixed capital formation grew 3.5% in the third quarter of the last fiscal, after declining in the previous three quarters.
Central PSUs and departmental undertakings (excluding railways) have bucked the investment famine by investing Rs 2.54 lakh crore in projects worth Rs 500 crore and above in the last financial year, achieving a creditable 96% of the annual target.