Budget Series 2017-18-#3 Impact on Railway Sector

Isha Varma & Suneet Unni

The 4th budget by our Finance Minister Arun Jaitley was presented on 1st February 2017, one month before the usual Budget date. There were apprehensions that the Railways sector may be understated as this is the first time the Railway Budget is merged with the Union Budget and is not a separate statement. However, Railways was given significant representation in the Budget and was welcomed by the Railway Minister Suresh Prabhu.

The Budget allocated a total of Rs 1, 31,000 crores for capital and developmental expenditure on Railways which includes Rs 55000 crores provides by the Government. The other major recommendations were as below:

Rashtriya Rail Sanrakshan Kosh

The finance minister proposed the setting up of Rashtriya Rail Sanrakshan Kosh (RRSK), a railway safety fund with Rs 1 lakh crores for a five-year safety upgrade. This fund would be utilized for track improvement, bridge rehabilitation, rolling stock replacement, human resource development and improved inspection system. He also proposed that expert international assistance would be harnessed to improve safety preparedness and maintenance practices in railways. Moreover, unmanned level crossings will be eliminated by 2020.

Upgradation of identified issues

Mr. Jaitley stated that railway lines of 3500 kilometers will be commissioned in 2017-18, as against 2800 kilometers in 2016-17 and dedicated trains will be launched for tourism and pilgrimage. The throughput is expected to rise up to 10% within the next 3 years. He further mentioned about the joint ventures with 9 State governments and 70 projects that have been identified by the Railways.

Development of Stations

It was announced that a minimum of 25 stations is expected to be awarded for station redevelopment. The budget is expected to help provide lifts and escalators in 500 stations and thus making it differently-abled friendly. Also, 7000 stations are expected to be fed with solar power.

Emphasis on Cleanliness

The budget focused on Swacch rail, under which an SMS-based ‘Clean my Coach Service’ has been initiated and another ‘Coach Mitra facility’ has been proposed for any coach related complaints and requirements. All coaches would be fitted with bio-toilets by 2019. Pilot plants for environment-friendly disposal of solid waste and conversion of biodegradable waste to energy are being set up at New Delhi and Jaipur railway stations.  Five more such solid waste management plants are in progress.

Transformational steps

Railways intend to implement end to end integrated transport solutions for selected commodities through a partnership with logistics players, who would provide both front and back end connectivity.  Rolling stocks and practices will be customized to transport perishable goods, especially agricultural products. Railways will offer competitive ticket booking facility to the public. The service charge on e-tickets booked through IRCTC is withdrawn. Cashless reservations have gone up from 58% to 68%. The finance minister assured that it will be their continuous endeavor to improve the Operating Ratio of the Railways.  The tariffs of Railways would be fixed, taking into consideration costs, quality of service, social obligations and competition from other forms of transport.

Metro Rail

Metro rail is emerging as an important mode of urban transportation.  A new Metro Rail Policy will be announced with a focus on innovative models of implementation and financing, as well as standardization and indigenization of hardware and software.  This will open up new job opportunities for the youth of the country. A new Metro Rail Act will be enacted by rationalizing the existing laws.  This will facilitate greater private participation and investment in construction and operation.

The Impact

This was the first time in 92 years that railway budget was announced on the Budget day in combination with the Union budget. The investors did not seem delighted with the allocation to railways as the rail stocks fell by 6% after the announcement. Titagarh Wagons fell as much as 6.6%.  However, this budget is expected to make the railways safer and cleaner. There are many issues like trains being late, need of doctors in trains and women safety that have not been raised. But this budget is reasonable enough to be a stepping stone towards transforming the Indian Railways.

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