Suresh Prabhu while presenting the Rail Budget 2015, said Centre will increase investment in its overloaded railway network...
Indian Railways Minister Suresh Prabhakar Prabhu before presenting the Rail Budget 2015 today in the Lok Sabha said the PM Narendra Modi-led Bharatiya Janata Party (BJP) government has done its best to fulfill people’s aspiration – this is its first full-fledged Rail Budget.
Realising the huge task at hand of transforming Indian Railways, Suresh Prabhu said he was a little taken aback, and asked himself, ‘Hae Prabhu, ‘Yeh kaam kaise hoga’.
However, unlike many of his predecessors, Suresh Prabhu did not tarry long on subject and proceeded to unveil policy post haste.
Prabhu, while presenting the Rail Budget 2015, said Centre will increase investment in its overloaded railway network to 8.5 trillion rupees ($137 billion) over the next five years, promising to modernise existing tracks but shying away from raising fares to fund the expansion.
Prabhu did not announce any new trains in the budget, departing from a tradition of laying on new services to politically important constituencies.
Take the opinion poll, tell us what you think:
Suresh Prabhu added Centre would “set the direction of a long and difficult road of reform.”
He also indicated that over the next year, investment in the railways will increase by about a half to 1 trillion rupees ($16.15 billion) including funds raised by market borrowing. To meet the five year target, investment will have to speed up more after that.
Prabhu, a trusted economic aide to Prime Minister Narendra Modi, said he would raise funds from multi-lateral lenders, infrastructure and pension funds, as well as “monetizing” railway assets. He said the railway would not be privatized.
“Over the next five years, the railways have to undergo a transformation,” Prabhu said in a speech that was short on details.
He said the share of rail revenue available for investments would rise to 11.5 percent in the fiscal year starting on April 1, up from 8.2 percent in the current fiscal year.
India is in a fortunate position that it has more funds available for investment thanks to a sharp drop in the price of diesel fuel that powers most Indian locomotives.
The BSE Sensex reacted negatively to the speech, sinking 0.7 percent, with wagon makers Titagarh Wagons down 2.6 percent, while Texmaco Rail & Engineering lower 7 percent.
Passenger fares are subsidised by freight revenues that are high compared to other countries. Prabhu said he planned to raise the amount of freight carried to 1.5 billion tonnes a year, from 1 billion tonnes at the moment.
Prabhu said spending would be focused on improving and expanding existing railway lines, many of which are operating at more than full capacity, with the average speed of the country’s best trains a sluggish 70 km (44 miles) per hour.
India’s is the world’s fourth largest rail network, but has been outstripped by China, which now has more than six times a much track.
Providing jobs for 1.3 million people, the railway is India’s largest single employer, and reform is politically sensitive. Successive governments have shied away from modernization, preferring instead to use the system to provide cheap transport and create jobs.
There are over 300 projects pending that need about 1.8 trillion Indian rupees ($28.9 billion), said a senior official.
Excluding market borrowing, the amount projected for investment in 2015/16 is up by 31 percent, signalling an increased commitment to infrastructure from federal funds.
The separate rail budget is a relic of the country’s British colonial past, when the network was India’s most profitable industrial asset.
KPMG Pre-Budget Survey
KPMG tried to understand the expectations of India Inc on various parameters such as policy reforms, clarity on indirect transfer tax provisions, applicability of MAT on foreign companies, amendment in the tax regime for REITs/ InvITs, deductions allowed to individuals, etc. Over 200 senior professionals across sectors participated in the online survey held during January and early February 2015.
Key highlights of the survey:
· 1) 83% of respondents expect the Government to introduce various policy reforms to promote the ‘Make in India’ campaign a success and turn India into a global manufacturing hub
· 2) 40-50% respondents expect the MAT and DDT rates to be reduced
· 3) 55% respondents are of the opinion, in line with the global benchmarking standards, multiple-year criteria for bench marking the transfer pricing transactions
· 4) 75% responded positively to introduction of GST along with their expectation that the Budget will lay the road map for implementing the same
· 5) 53% respondents who expect an increase in the maximum limit of income not to be considered taxable. Further, almost 70% respondents to the survey expect an increase in limit for deductions allowed under section 80C
· 6) 60% who expect the government to introduce/rationalise tax incentives to achieve the government’s vision.
Take the poll, tell us what you think: