Capital investment may be stagnating in general, but government agencies seem to be partly bridging the deficit. Indian Railways, which had seen an unprecedented 52% jump in capex in the last financial year, is maintaining the tempo in the current year as well, data gathered by FE reveal.
In April-August this year, the railways — under Union minister Suresh Prabhu — invested Rs 34,748 crore in capital equipment and facilities, up 31% from the corresponding period last year. The largest amounts were spent on laying of new rail lines (Rs 4,531 crore, up 80%), rolling stocks (Rs 6,768 crore, up 11%) and passenger amenities (Rs 363 crore, up 29%).
These apart, Rs 1,716 crore has been spent in the first five months of this year. Though this was down 15% from the year-ago period, sources said the high base (doubling projects saw a huge increase last year) is part reason for the decline.
Also, doubling projects usually gather momentum in the later part of the year.
What has enabled the transporter to keep capex projects going for the second year in a row is the additional resource mobilisation through extra-budgetary sources. “Indian railways has increased its focus on laying of new lines in order to augment capacity and rectify the congestion and excess capacity utilisation problems it faces on many routes. This may be the reason why doubling, track renewal and electrification projects have taken a hit,” said Abhay Krishna Agarwal, partner infrastructure & PPP at Ernst & Young LLP. “A clearer picture of the transporter’s spending and whether it is on track can only be understood according to the capital spending figures in Q3 and Q4 because that’s the period when actual construction work picks up,” he added.
Even though the national behemoth seems to be on track when it comes to spending on projects which yield it financial returns, its freight earnings have taken a major hit owing to the slew of freight rationalisation schemes it rolled out in the current fiscal year. Its overall freight earnings till August FY17 declined 10% to Rs 40,654 crore as compared to the corresponding period last year. Freight earnings from coal, cement and fertiliser shrank by 15%, 13% and 13%, respectively.