Highlights of Railway Budet

Highlights

  • Proposed an ambitious capital outlay of Rs. 1.21 lakh crore for 2016-17, a jump of 21 per cent over this year.
  • Indicated a cut in freight tariffs
  • Tapping new revenue streams and optimising expenses are part of a new structure
  • Action has been initiated on 139 budget announcements made last year

Passenger Services

  • No hike in passenger fares
  • on-board entertainment and travel insurance options at the time of booking.
  • Swacch Bharat: 17000 biotoilets and additional toilets in 475 stations before the close of this financial year.
  • Increased quota for senior citizens and women travellers this year.
  • wifi at 100 stations this year and 400 stations next year.
  • Enhanced capacity of e-ticketing system from 2,000 tickets/min to 7,200/min. Supporting 1.2 lakh concurrent users now, as opposed to 40,000 earlier.
  • Deen Dayal coaches for long distance trains for unreserved passengers. These coaches will include potable water and higher number of mobile charging points.
  • IRCTC to manage catering service in phased manner. Local cuisine of choice will be made available to passengers.
  • Cleaning of toilets by requests through SMS.
  • Children’s menu, baby foods, baby boards to be made available for travelling mothers.
  • GPS-based digital display in coaches for showing upcoming stations.
  • Will open cancellation facility through 139 helpline number.
  • Introduce bar-coded tickets on pilot basis to tackle menace

Safety

  • Eliminate all unmanned level crossings by 2020.
  • All major stations to be brought under CCTV surveillance in a phased manner.

On new projects to be implemented this year:

  • Overnight double-decker trains to be introduced on business travel routes.
  • 1,600 km of electrification this year and 2,000 km proposed for the next year.
  • Broad Gauge Lumding-Silchar section in Assam, connecting Barak Valley with rest of country.
  • North-East India, especially Mizoram and Manipur, to be connected through broad gauge soon.
  • Special purpose vehicle for the Ahmedabad-Mumbai high speed corridor registered this month
  • Semi-high speed trains along the Golden Quadrilateral.
  • It committed to expediting critical projects to connect the North-East and Jammu and Kashmir with the rest of the country.
  • Also announced three new dedicated freight corridors to connect North-South (Delhi to Chennai), East-West (Kharagpur-Mumbai) and East Coast Corridor connecting Kharagpur to Vijayawada. The projects will be taken up on a priority basis.
  • Among the new announcements, East Coast connectivity through Dedicated Freight Corridor is perhaps the most impactful, as it would contribute to India participating in global production networks in South East Asia, and to Make in India
  • That new project announcements are limited indicates adherence to implementation focus, highlighted in the previous Budget

Passenger Convenience

Four new categories of trains announced

  • Budget announced four new categories of trains — one for unreserved passengers and three for reserved passengers.
  • The Antyodaya Express, a long-distance, fully unreserved, superfast train service, for the common man, to be operated on dense routes.
  • Two to four Deen Dayalu coaches will also be added to some long-distance trains for unreserved travel to enhance our carrying capacity for the masses
  • A fully third AC train, called Humsafar – The Tejas category of trains will run at 130 km an hour, with entertainment, local cuisine, Wi-Fi and other amenities on board.
  • Third AC is always a profit-making initiative. An added benefit will be that they will allow the Railways to target the subsidised prices towards these trains, so that they are not availed by higher income passengers
  • The final category is UDAY (Utkrisht DoubleDecker Air-conditioned Yatri), which will be overnight trains plying on the busiest routes to increase capacity by 40 per cent..

Apps, wi-fi services in pipeline

  • From connectivity to safety, the Budget places its bets on technology to make train travel more comfortable for travellers.
  • The Railways intends to bring out two mobile apps — one dealing with all ticketing issues and the other for receipt and redress of complaints and suggestions.
  • A new service “Clean my Coach” service will also be introduced Pan-India through which a passenger will be able to request cleaning of his/her coach/toilets on demand through SMS.
  • The budget also proposes to install information boards in trains enumerating onboard services along with GPS-based digital displays inside coaches to provide real time information regarding upcoming halts.
  • The Railway Ministry, in partnership with Google, will start Wi-Fi services at 100 stations this year, increasing it to 400 more stations in the next two years, the Minister said.
  • To keep boredom at bay onboard, Budget proposes a partnership with FM Radio stations and introduce Indian Railways bi-lingual magazine Rail Bandhu to all reserved classes of travellers in Mail/Express trains. The magazine will be made available in all regional languages.
  • By 2020, the Railways would work towards meeting long-felt desires of the common man, including use of high-end technology to significantly improve the safety record, elimination of all unmanned level crossings and increasing punctuality to almost 95 per cent.

Rail travel insurance on the cards

  • The Railways has proposed an option to buy travel insurance for the passengers and said the government was working with the insurance companies on the issue.
  • To minimise the financial loss to passengers from such events, govt is working with insurance companies to offer optional travel insurance for rail journeys at the time of booking
  • While insurance companies welcomed the move, as it will increase insurance penetration, they also pointed out that delivery of services would be the key for the success of the plan.

Freight Ecosystem

Policies to promote freight transport through railways

The 2020 vision clearly defines the special package to improve the freight ecosystem in India thus getting fresh revenue streams for IR

  1. Indian Railways’ (IR) share of the freight market has been declining and the Railway Budget includes several measures to address this trend, including running time-tabled freight trains “with credible service commitments” by 2020. Network capacity constraints have prevented the railways from running time-tabled services so far but IR will start running container, parcel and commodity trains on a pilot basis in 2016.
  2. The country will get three new dedicated freight corridors, according to the Railway Budget 2016, in addition to the Delhi-Mumbai and Delhi-Kolkata freight corridors that are due to be commissioned in 2019. The new projects are a North-South corridor, from Delhi to Chennai, an East-West corridor from Karaghpur to Mumbai and an East Coast corridor, from Kharagpur to Vijayawada. The projects will be financed through a PPP (public private partnership) mechanism and rolled out on a high priority basis
  3. Expanding the freight basket, which is highly concentrated (10 commodities account for 88% of the mix)
  4. Building terminal capacity to improve last mile connectivity
  5. Rationalising tariffs structures so freight is competitive

Structural changes

More powers to zonal railways for faster decision-making

  • The Railway budget announced a radical overhaul of its organisational structure, more transparency and a hard look at the status quo on its operational parameters such as the average train speed.
  • Significantly, more powers have been delegated to the zonal railways for faster decision-making.
  • It also introduced accountability for officials –
  1. This includes defining key result areas (KRAs) for general managers and divisional railway managers to evaluate their performance.
  2. A single official would be made accountable for each train’s on-board experience to address passenger concerns
  3. third party audit will be conducted to ensure the quality of services on trains and stations.
  • The Railways will work on ensuring reserved accommodation to travellers on demand
  • Time tabled freight trains (for which a pilot will be started in 2016-17)

Tech friendly Budget

  • IR intends to use the latest drone and geo-spatial-based satellite technology for remotely reviewing the physical progress across major projects. Monitoring of dedicated freight corridor will be operationalised through this mode in 2016-17
  • The railways had already started using social media for resolving issues faced by the travellers, bringing transparency in its working. There will be extensive usage of this medium.
  • The railway ministry has also set apart Rs.50 crore for providing innovation grants to employees, start-ups and growth-oriented small businesses to support internal and external innovation.
  • The minister also proposed to set up a R&D organisation for developing strategic technology and bringing in holistic advancement.
  • Will set up a R&D organization, a Special Railway Establishment for Strategic Technology & Holistic Advancement, SRESTHA,
  • The new R&D organisation—Research Design and Standards Organisation— will now focus only on day-to-day issues while SRESTHA would drive long-term research.
  • The Indian Railways will also install 20,000 screens across 2,000 stations to provide real-time information to passengers. He also said the ministry will boost security at various stations through CCTVs and helplines.

Financing for railways budget

What does the Budget say ?

  • The budget announced increasing investments by 21 per cent to Rs.1.21 lakh crore in 2016-17 – more than double the average investments made by the previous government in the 2009-14 period.
  • There are obstacles for investment
  1. Slow growth of our economy’s core sectors due to international slowdown
  2. The looming impact of the 7th Pay Commission and increased productivity bonus payouts
  • The budget factored in Rs.20,500 crore as impact of the recommendations of the 7Th Pay Commission in 2016-17; leading to a decline in the projection of the operating ratio to 92 per cent (the Railways will spend 92 paisa to earn a rupee). Operating ratio is a measure of financial performance of the Indian Railways and a lower ratio means better efficiency.
  • In 2015-16, the operating ratio declined to 90 per cent from 91.3 per cent in 2014-15. The decline in operating ratio from 88 per cent to 90 per cent, and to 92 per cent for next year is along expected lines, with freight and passenger traffic remaining nearly flat, and expenses continuing to increase.

3. As both passenger and freight traffic declined, the revenue earned by the Indian Railways was hit. The total revenue declined by 8.9 per cent to Rs.1.72 lakh crore in 2015-16 compared with last year. The gross traffic earnings were 8.6 per cent less than the target of Rs.1.83 lakh crore in 2015-16. The freight earnings were hit due to poor performance by the core sector – which constitutes around 88 per cent of the goods transported by the Indian Railways. The share of railways in the total freight traffic (35 per cent at present) has been consistently declining over the years

4. Most of the state governments coffers are empty

5. Private players are currently not in a mood to pick up PPP projects.

6. While international agencies are open for investing in Indian projects, they demand more reforms and at faster pace

In this context, how the increased investment target of Rs.1.2 lakh crore will be met, becomes more pertinent

Positives – budget expectations

  • However despite the burden of Seventh Pay Commission, the operating ratio is projected to move up by two per cent.
  • The government plans to raise Rs.20,985 crore in 2016-17 from institutional financing, a 119 per cent increase from the revised estimates of 2015-16.
  • This year, Railways plan to control the working expenses. The savings from diesel and electrical energy account would be Rs.5,000 crore. We plan to increase freight by 50 million tonne. With the passenger initiatives, the passenger earnings will go up. The non-fare box revenue will be doubled. So, increased revenue combined with reduction in working expenses will finance the Seventh Pay Commission burden.
  • SPV has been formed and registered. National High Speed Rail Corporation is the name of the company.Initially, Rs.200 crore will be provided as equity to the SPV. The total authorised capital is Rs.20,000 crore for this company. The funding model is 81 per cent of the funds will come from Japan and the balance has to be a joint company between the government of India and the (governments of) two states.
  • An incremental traffic of 50 million tonne in freight is expected in 2016-17 as the government is looking to bring down freight tariffs and look to increase the basket of freight goods.
  • The total revenue is expected to grow by 10 per cent to Rs.1.89 crore in 2016-17 as the government is looking to tap other sources of revenue besides passenger and freight.
  • Budget listed station redevelopment, monetising land along tracks, monetising soft assets, advertising as some of the means to shore up non-fare revenues.

Public-private partnerships to fuel future growth of Indian Railways

  • The Railway Budget has laid emphasis on Public Private Partnerships (PPP) to implement initiatives such as rail connectivity for ports, station-redevelopment, rail-side logistics parks and warehousing as well as satellite terminals.
  • A committee appointed for the purpose of revamping the ministry’s PPP cell has submitted its report and the initiative is “under implementation. The cell will be strengthened as part of organisational restructuring process to improve ease of doing business with the Indian Railways
  • The capital expenditure for the next financial year, pegged at Rs.1.21 lakh crore, calls for abandoning the “business-as-usual approach” and continually innovating to develop new frameworks for PPP
  • Foreign investors from Spain and France were keen on dedicated freight corridors (DFC) projects provided they were structured properly in terms of financial returns and risk-allocation and mitigation, he said. Land acquisition for dedicated freight corridors could take a long time.
  • The ministry would take up dedicated freight corridors and implement it in a time-bound manner through innovative financing mechanisms, including PPP. The corridors will to cater to rapid expansion of freight business
  • Port connectivity was important for seamless logistics to boost imports and exports and as a part of the ongoing coastal connectivity program, the government plans to undertake implementation of rail connectivity for the ports of Nargol and Hazira under the PPP model during the next financial year.