Rail Budget 2015: Suresh Prabhu rules out privatisation; effects no hike in passenger fares

By: | Updated: March 1, 2015 7:38 AM

The Railway Budget today hiked freight rates on cement, coal, foodgrain and pulses, urea, kerosene and LPG by up to 10 per cent to mop up an additional Rs 4,000 crore...

Rail Budget, Rail Budget 2015, Suresh PrabhuRailMinister Suresh Prabhu arrives at Parliament to unveil the Rail Budget 2015 in New Delhi. The budget signals the direction of long-term reforms needed to revamp the world’s fourth-largest rail network. (Reuters)

The Railway Budget today hiked freight rates on cement, coal, foodgrain and pulses, urea, kerosene and LPG by up to 10 per cent to mop up an additional Rs 4,000 crore a year but spared passengers from any raise in fares while ruling out privatisation.

Presenting his maiden budget, the first full-fledged exercise of the Modi government, Railway Minister Suresh Prabhu did not announce any new trains or lines pending a review but said he would concentrate on consolidating the existing ones.

“I have not increased the passenger fares,” he announced at the outset of his hour-long budget speech and made no mention of the rationalisation of freight rates that was done by a sleight of hand through an explanatory memorandum.

The hike, which will be effective from April 1 this year, will cover a wide-range of items like cement, coal, grains and pulses, urea, iron ore, kerosene and LPG.

While common salt has been left untouched, in the case of diesel and limestone there will be a marginal reduction in the freight adjustment done through re-classification of goods and distance rationalisation.

At the post-Budget briefing, Prabhu sought to justify the exercise saying rationalisation has always been done while Member (Traffic) Ajay Shukla was at pains to project that on some goods actually there will be reduction in freight on longer distance.

Minister of State for Railways Manoj Sinha said there will be no increase in the prices of urea for farmers since the government will be subsidising the commodity.

But officials estimated an additional revenue mobilisation of Rs 4,000 crore a year on account of freight increase. Industry associations estimate Rs 3,000 crore subsidy burden on movement of urea and Rs 600 crore on foodgrains.

Rail Budget, Rail Budget 2015-16, Suresh PrabhuA graph representing Rail Budget at a glance.

Carriage of grain and pulses as well as urea will suffer a 10 per cent hike in freight while coal will attract a 6.3 per cent increase.

In a Budget that had no big bang announcements but aims at providing more facilities, Prabhu unveiled 11 major thrust areas to improve cleanliness, better bed linen, helpline for ensuring security including camera surveillance for women safety, ticketing and e-booking of meals of choice.

Onboard entertainment on select Shatabdi trains, provision of wi-fi in B-category trains and 200 more stations to be brought under Aadarsh Station Scheme were some of the passenger amenities that the Railway Minister announced.

The Budget envisages an investment of Rs 8.5 lakh crore in the next five years to be mobilised from multiple sources to cater to funding through multilateral development banks and pension funds.

It hiked the plan outlay for 2015-16 by 52 per cent to Rs 100,011 crore over the revised estimate of 2014-15. Passenger earnings growth has been pegged at 16.7 per cent and earnings target budgeted at Rs 50,175 crore.

Goods earnings is accordingly proposed at Rs 1,21,423 crore, which includes rationalisation of rates, commodity classification and distance slabs.

Against the backdrop of talk of privatisation of railways, the Minister said Railways will continue to be a precious national asset and people of India will own railways always.

The other thrust areas include efforts to make Railways the prime mover of economy again, resource mobilisation for higher investments, decongestion of heavy routes and speeding up of trains, passenger amenities and safety.

A map of Indian Rail Network. (Reuters)A map of Indian Rail Network. (Reuters)

Other coaching and sundries are projected at Rs 4612 crore and Rs 7318 crore. Gross traffic receipts are estimated at Rs 1,83,578 crore, a growth of 15.3 per cent.

Referring to the Rs 8.5 lakh crore investment over five years, Prabhu said a broad indicative investment plan has been prepared.

“But the scale of investment needs is such that it will require us to seek multiple sources of funding. We will tap other sources of finance. Multilateral development banks and pension funds have expressed keen interest in financing new investments.

“They seek sources of predictable and recurring revenue, which we can provide through the issuance of long debt instruments to fund revenue-generating railway projects,” the Minister said.

The cleanliness project includes new toilets covering 650 new stations, bio-toilets, national fashion technology to design bed linen, online disposal of bed rolls.

On passenger facilities, the Budget extended the window for advance booking of tickets from 60 to 120 days.

An ‘Operation five minutes’ will be introduced for issuing unreserved tickets besides other initiatives like hot buttons, coin vending machines and concessional e-tickets for differently-abled passengers.

E-catering will be launched for select meals from an array of choices, ordering food through IRCTC websites at the time of booking tickets and integrating best food chains into the project.

The Rail Minister set four goals to transform the national transporter over the next five years. These include delivery of a sustained and measurable improvement in customer experience and to make rail a safer means of travel.

It also includes expansion of railways’ capacity substantially and modernise infrastructure (increasing daily passenger carrying capacity from 21 million to 30 million; increase track length by 20 per cent from 1,14,000 kms to 1,38,000 kms; growth of annual freight carrying capacity from 1 billion to 1.5 billion tonnes).

Making the railways financially self-sustainable is also one of the goals. For this, large surpluses are to be generated from operations, not only to service the debt needed to fund capacity expansion, but also to invest on an ongoing basis to replace depreciating assets, Prabhu said.

Giving details of investments segment-wise, Prabhu earmarked Rs 1,99,320 crore for network decogestion, including DFC and electrification.

Rs 1,93,000 crore were earmarked for network expansion, Rs 39000 crore for national projects (North Eastern and Kashmir connectivity projects) and Rs 1,27,000 for safety (track renewal, bridge works, road overbridge, road underbridge, and signalling and telecom).

Rs 5000 crore was allocated for information technology/ research, Rs 1,02,000 crore for rolling stock (locomotives, coaches, wagons production and maintenance), Rs 12,500 crore for passenger amenities, Rs 65,000 crore for high speed rail and elevated corridor, Rs 1,00,000 crore for station redevelopment and logistic parks.

Under the ‘Operation 5-minute’ facility, ticketless passengers can get regular tickets within five minutes of entering station.

Other steps include making railway helpline number 138 operational 24×7, toll-free number 182 for security-related complaints and CCTVs in select trains for women safety.

SMS alert service is to be introduced to inform passengers about train arrival/departure, while wi-fi facility would be introduced at 400 railway stations.

Rail-cum-road ticket is to be extended to many stations and more trains are proposed to be added under scheme for ordering food while booking tickets.

More general class coaches are to be added in identified trains and more air-conditioned EMU services would be introduced on Mumbai suburban section.

Projects worth Rs 96,182 crore to be undertaken to expand capacity of 9,420 km rail lines.

Feasibility report of high speed train between Mumbai and Ahmedabad is expected by middle of this year, the Minister said.

Four dedicated freight corridors are to be completed this year, while 6,608 kms of track are to be electrified, he said.

Wagon-making scheme is to be reviewed to make it easier for private investment, he said.

Speed on nine corridors is to be increased from 110-130 to 160-200 kms per hour respectively, Prabhu said.

A 5-year corporate safety plan is to be ready in three months to identify annual quantifiable targets.

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