The railway minister was confronted with the challenging task of building infrastructure and capacity along with improving safety and passenger services, within a framework of very limited resources. Addressing this constraint, the minister has emphasised on the transformation of Indian railways by deploying extra-budgetary funds. We believe that accessing funds from state governments, public sector enterprises, insurance and pension funds, and the private sector would be a game-changer for the railway system.

With Indian Railways is the backbone of logistics in India, with 22 million passengers depending on it every day, the minister has admirably balanced the economic and social expectations from rail infrastructure. Further, by bringing out a White Paper and a vision document titled Vision 2030, Suresh Prabhu has pointed out that improving the railways is a medium-term agenda. The four goals outlined in the budget include better passenger amenities, safer rail travel, capacity addition and modernisation, and financial self-sustainability. Nine areas have been prioritised to meet these goals.

To begin with, the size of the Plan Budget has gone up by a huge 52%. The attempt is to raise low-cost funds from new sources such as insurance and pension funds, which is a big step forward. Funds will also be tapped from bilateral and multilateral agencies such as multilateral development banks. Joint ventures with public sector enterprises and state governments are planned for specific projects. Such innovative funding mechanisms, if effectively tapped through remunerative schemes, can bring in the much-needed resources, helping to take the railways to the next level.

Given that passenger fares were raised by the Modi government recently, further increase in the fares was not expected. However, the importance accorded to passenger services, to make rail travel a pleasant experience, is welcome. A number of small issues have been addressed, taking care to anticipate the needs of passengers, including choice in food, access to clean drinking water, wi-fi at more stations, and more mobile charging stations in trains. The emphasis on cleanliness under the ‘Swachh Rail, Swachh Bharat’ slogan will hopefully result in cleaner trains and stations. The target of 17,000 bio-toilets is high and would make a visible difference to train facilities.

Expansion of railway infrastructure and its modernisation is an urgent task. The budget has raised the expenditure on capacity augmentation by a whopping 84%, for 1,200 km at R8,686 crore. An increase of 2,700% over the FY14 figure is proposed for doubling/ tripling/ electrification works extending to 77 projects and covering 9,400 km at a cost of R96,182 crore. Station redevelopment is on the priority agenda and the plan to build satellite terminals is noteworthy as it would decongest key stations.

Safety was another pillar of the Rail Budget and a five-year safety plan is under development. The Kakodkar committee report should be speedily acted upon and we welcome the use of technology in the form of satellite-based applications for preventing collisions, making unmanned crossings safer and so on. The sanction of R6,581 crore for eliminating over 3,000 level crossings reflects the commitment to safety.

The stress on research in the railway engineering and systems is also laudable. With four railway research centres in universities and formation of an innovation council as well as other initiatives, a much-needed fillip would be imparted to preparing for the future. The participation of overseas rail experts through the Foreign Rail Technology Cooperation Scheme can help in increasing speed as envisaged for nine rail corridors and in heavy haulage.

From the private sector perspective, several areas are notable. First, station redevelopment has been revamped through open bids on a concession basis. This would encourage private sector to bring in funds and leverage land resources available in station vicinity. Second, the cell for public private partnerships would be reinvigorated for better use of private resources. The new Model Concession Agreement is already in force, and simplification of processes would facilitate more investments from the private sector. Third, private sector participation in private sidings, production of wagons, etc, would be expanded. Four, issues of transparency, governance and monitoring of projects have been accorded high priority, which would impart certainty in private sector operations. Finally, improvement in railway services as well as better administration would help freight movement across the country.

Industry was hopeful that freight rates would not be raised further. India’s railway system is already expensive for freight movement compared to other countries with large railway networks, and this has gradually shifted freight traffic to road travel which is less environmentally-friendly.
The minister has promised to take many new initiatives in the comprehensive budget he presented. Resource crunch would be the predominant challenge to be overcome. The minister’s innovative financing options encourage us to think that this would transform Indian Railways to emerge as a vibrant and dynamic logistics provider and preferred travel mode for the nation.

The author is director general, Confederation of Indian Industry