Narendra Modi govt says private funds will help, but gives no details in Rail Budget

Jul 08 2014, 20:08 IST
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Investors had harboured expectations for Narendra Modi's government to use the railways budget to detail widespread reform. (PTI) Investors had harboured expectations for Narendra Modi's government to use the railways budget to detail widespread reform. (PTI)
SummaryNarendra Modi's govt disappointed investors with its first major economic policy statement...

is nothing in this entire budget which tells you how they will make it attractive for private sector," said Manish R. Sharma, executive director of capital projects and infrastructure at PwC India.

"Given that in the past PPP has not taken off in railways...it would be very important to see how they come up with implementable mechanisms which the private sector will buy," he said.

Stock investors also expressed doubts about the prospects for PPPs, with shares in India's railway-related stocks falling after the speech. Texmaco Rail & Engineering closed down 19.9 percent while Titagarh Wagons dropped 5 percent.

Gowda said proposed market borrowings would total 117.9 billion rupees this fiscal year, down from 128 billion rupees estimated in the interim budget.

"Budgeted outlay is looking below expectations as the government is looking for more private partnerships now than on previous occasions," said Deven Choksey, managing director at KR Choksey securities.

Reform of India's railways has long proven politically sensitive. Successive governments have backed away from modernization, preferring instead to use the system to provide cheap transport for voters, and jobs for 1.3 million people.

Rail Budget: Read full speech

Rail Budget: Highlights

That sensitivity was on display on Tuesday, when supporters of India's main opposition party gathered outside Gowda's residence to protest against a recent fare rise, and one protester removed the minister's nameplate from his gate, local TV showed.

Modi's government pushed through a fare rise last month, but partially rolled it back later, under political pressure. ($1=59.7400 Indian Rupees)

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