Railways Minister Minister Suresh Prabhu keeps passenger fares in Rail Budget 2015 intact given the fall in diesel prices, which saved him Rs 5,000 crore this year.
Railways Minister Suresh Prabhu on Thursday presented a sober Rail Budget, not announcing new trains or factories, and instead laying the track for increasing carrying capacity by substantially stepping up investment in infrastructure.
He kept passenger fares intact given the fall in diesel prices, which saved him Rs 5,000 crore this year, but hiked freight rates for some commodities, including coal, by 6.3 per cent and cement by 2.7 per cent.
To transform the Railways and make it future-ready, Prabhu proposes to invest Rs 1 lakh crore in 2015-16, and over the coming five years Rs 8.5 lakh crore.
Of the Rs 1 lakh crore investment planned in 2015-16, the Finance Ministry has contributed Rs 40,000 crore as gross budgetary support, market borrowings through IRFC bring Rs 17,665 crore, Prabhu’s new financing mechanism Extra Budgetary Resources (institutional finance) another Rs 17,136 crore, Rs 17,793 crore through internal resources, Rs 5,781 crore through PPPs and Rs 1,645 crore from diesel cess.
“Railways will create new vehicles to crowd in investment from long-term institutional investors and other partners. These may include setting up an infrastructure fund, a holding company and a joint venture with an existing NBFC of a PSU with IRFC, for raising long term debt from domestic as well as overseas sources, including multilateral and bilateral financial institutions,” he said in his budget speech.
The funds would be used for doubling and tripling lines, gauge conversion and building traffic facilities on congested routes. The money allocated for doubling of lines alone has seen a never-before 357 per cent jump to around Rs 18,000 crore. There is also a 67 per cent jump in the money allocated to passenger services. His proposed thrust areas include cleanliness, ease of securing tickets and berths, and security of women.
Decongestion and capacity augmentation were the buzzwords of Prabhu’s budget. “In the past we have been used to seeing Rail Budgets meant for others but not Railways. This Rail Budget is meant for Railways,” he said. “All over the world, railway works are carried out largely with moneys from markets. Instead of relying solely on the Finance Ministry, the idea is to get funds from outside into projects that offer healthy returns. I’m also looking at FDI,” Prabhu told The Indian Express after the budget.
The success of Prabhu’s budget next year will depend a lot on his ability to raise funds through other institutional mechanisms. Prabhu has anticipated that his overall Plan size might actually get higher, as these financing options start working out over the next 12 months.
The Railways have projected their total earnings to increase by 15 per cent to Rs 1,83,578 crore, with freight accounting for two-thirds and passenger earnings for 27 per cent. Prabhu expects 8 per cent growth in freight and 6 per cent increase in passenger traffic.
Against an operating ratio of 91.8 per cent (money spent to earn Rs 100; the lower the more efficient) in 2014-15, Prabhu hopes to better it substantially to 88.5 per cent by the end of next year.
“With more capacity we create by doubling and tripling of lines, we will be able to carry more passengers and freight and earn more,” Chairman, Railway Board A K Mital said after the budget.
Prabhu may not have touched fares, but he did tinker with the freight structure to increase the base rates by 10 per cent. However, he also altered the distance-related slabs for commodities in a way that the average increase works out to be 3 per cent. In several commodities like diesel, salt, steel etc, there is actually a decrease for certain distances. The additional mop-up is just about Rs 4,000 crore on account of this.
Among the new passenger-friendly initiatives, Prabhu has approved the procurement of self-propelled electrical train sets. These will run on popular routes. They do not require locomotives to haul them, and run at better speeds. The procurement plan had been stuck for five years.
The Rail Budget is the second in a series of three documents Prabhu has invested in. The first is a White Paper on Railways tabled in Lok Sabha before he presented the budget. The second is the Budget itself, and the third is a “Vision Document for 2030”, which is in the works.