Rail Budget 2014 decoded: 7 power points

Jul 09 2014, 11:31 IST
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Rail Budget shows government has decided not to go the populist way but to restore credibility with tight discipline on execution. (PTI) Rail Budget shows government has decided not to go the populist way but to restore credibility with tight discipline on execution. (PTI)
SummaryRail Budget indicates a 5%-8% fare hike may be coming.

Increased passenger amenities, more safety measures, timely completion of projects and increased financial discipline are the primary highlights of the Railway Budget 2014-15 presented on Tuesday by Sadananda Gowda. Check out the top points:

1. The growth in total receipts at 14% is in line with a 13% decadal average. We believe, if the economy picks up, there may be an upside to the budgeted projections.

2. From this point, the Railway Budget numbers look reasonable and well balanced. In a welcome departure, the Budget proposes a multi-pronged approach to make Railway journey safe and secure and comfortable for passengers.

3. More thrust has been placed on passenger amenities, cleanliness and efficient station management.

4. It is also indicated that the Railways will take round the year decisions to improve the efficiency of the Indian Railways and the fare hike will now be decided by Railway Tariff authority and could be a bi-annual exercise depending of fuel cost. Our estimates shows that based on current fuel prices, a 5%-8% increase may be further warranted.

5. Also, given the severe fiscal constraints, FDI in Railways is necessary. We recommend If FDI in railways is allowed under approval route, ’national security’ concerns can be looked into by Foreign Investment Promotion Board (FIPB).

6. We also recommend that India should learn from Japan and Britain in involving private participation in Railways. Beginning in the late 80s, Japan privatized Japanese National Railways (JNR) by converting JNR into seven different companies through a process called ‘vertical integration’ In fact, the Railways is moving in that direction by unbundling the different services.

7. On the whole, the Government has decided not to go the populist way but to restore credibility with tight discipline on execution. Read Full Report

By Dr. Soumya Kanti Ghosh, Chief Economic Adviser, Economic Research Department, State Bank of India

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