Rail Budget 2016 to create demand to spur economic growth: Industry

By: |
New Delhi | Published: February 26, 2016 12:34:28 AM

Suresh Prabhu's Railway Budget announcements for the next fiscal that begins April 1 is more aimed at reviving demand to spur growth in the broader economy...

Suresh Prabhu’s Railway Budget announcements for the next fiscal that begins April 1 is more aimed at reviving demand to spur growth in the broader economy, enhancing investments in long-term infrastructure projects, even as the railways hopes to trim costs and increase its revenue through non-conventional streams such as advertising, industry executives said on Thursday.

For example, the rail budget announcement of Humsafar, a fully air-conditioned third-A/c train, and Uday overnight double-decker trains with improved passenger amenities will translate into a demand for equipment’s.
“Digitisation will help the electronics sector, there will also be demand for toilets, air conditioners etc,” CP Sharma chairman of Daulatram Rail told FE.

Echoing Sharma’s views, Nalin Jain, president & chief executive of GE Transportation said the budget’s digital initiatives such as electronic ticketing to track and freight to asset management “presents a large opportunity” for the companies such as his to provide services and solutions.

The two locomotive factories that GE and Alstom is setting up in collaboration with the Indian Railways that the railway budget outlined today, as well as the 49 odd high priority projects that are expected to come on stream “all of this will add more to manufacturing activity,” Jain said. He added that the factories will help in bringing in smaller ancillary manufacturing units near the facilities.

The comments assumes significance as the Indian Railways, the largest organisation within the government, is also the biggest employer in the country, and contributes about 2% to the country’s Gross Domestic Produce, or GDP.
Industry executives also said that most of the key announcements with regard to the seven mission modes to transform the Indian Railways into a more efficient organisation, was aimed at increasing the scope of large scale projects and create bigger infrastructure in the country through public investments.

“All 7 mission mode projects has something to do with infrastructure,” said Tilakraj Seth, executive vice president for Rail Business at Siemens.

Rajeev Jyothy, chief executive of L&T Rail Business said the announcements of three new dedicated freight corridors indicates that the government could well be spending at least Rs 3 lakh crore in the next few years on the project. He also expects the tenders by the Indian Railways to be of larger value after the new announcements, especially with the minister announcing that all contracts over Rs 300 crore to be awarded through the EPC route.

The Indian Railways move into EPC, or engineering, procurement and construction model for executing projects, would mean that the size of projects could be more than Rs 1,000 crore, Jyothy said. “This would excite bigger infrastructure players,” he said.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.