Railway Budget 2013-14: Will railways rise from its cash-strapped slumber?

Railway Budget 2013 is around the corner and it will surpass the definition from it being an estimate of income and expenditure for a set period of time. You’ll hear the buzzword all the time; everyone’s talking about it. Some are talking about Railway Budget in the sense they talk about the ozone layer while some of us are really concerned as to what Pawan Bansal, honorary rail minister, would present as against budget expectations and what P.Chidambaram will do to avert a sovereign credit downgrade that’s affected Railway from some-time now. Rumor has it that this time there will be a lid on spending and public spending would be cut by a good 10% from this year’s original target making it the most austere railway budget  unveiled. On the other hand we hear a 100 new trains are to be introduced. What’s going on here in this budgetary field?

All attention will be, however, on passenger fares as Pawan Bansal had recently told reporters that the increase in diesel price following the fare hike has negated the additional revenue which Railways expected to mop up by Rs 3,300 crore.

Rukmini Roy taps into the Railways Budgetary scenario and gives you what to expect of this year’s Railway Budget.

by Budget 2013
1 year, 9 months ago

With the recent hike in diesel prices putting an additional burden of Rs 3,300 crore
on Railways, the behemoth is considering to further increase passenger fares or raise freight charges. That is why you should be bothered about the Railway Budget 2013-2014!  

The ministry, which is in the process of finalizing the Rail Budget 2013-14 to be presented on February 26, is likely to raise catering charges in premier trains like Rajdhani, Duronto and Shatabdi, which will be part of the fare. Running under a deficit of Rs. 25,000 crore in the passenger segment, the passenger fares have already increased upto 21% from December 22. Done to regurgitate a good amount of 6600 crore, the diesel price hike of Rs. 10.8/liter suddenly put an additional burden of 3300 crore annually.

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It’s hard to say which budget has been the best because Railways has 43,000 hectares of vacant land which it is trying to use for commercial purpose and it’s bewildering to know that passenger fares were hiked last year after a good 10 years. Which means the railway ministers have not touched the Railways budget for a decade! There are 347 rail projects worth Rs 1.47 lakh crore pending.

Here is a great infographic on Railway Budget 2012-2013

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Funny that Dinesh Trivedi mentioned so much about Mamta Banerjee because his “safety, safety, safety” last year did not really work. But regardless here's a look at Railway Budget Highlights 2012. 

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On fare / price section, proposed document had:

  1. Express train fare up by 5 paise per km, 10 paise per km for AC chair car, 10 paise per km for AC 3-tier, 15 p per km for AC 2-tier, 30 paise per km for AC First class.
  2. Passenger fare for sub-urban trains hiked by 2 paise per km, mail trains by 3 paise per km.
  3. No steep increase in passenger fares; 2 paisa per km for suburban trains; 3 paisa per km for mail and express trains.
  4. Independent tariff authority suggested; needs serious debate; experts panel established; decision after debate in parliament.
  5. 50 per cent concession in fare in AC classes to anaemia and sickle cell disease patients.
  6. Body of experts to examine setting up of an independent Railway Tariff Regulatory Authority.
  7. Platform tickets to cost Rs. 5.
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With regards to services, this is what the document proposed:

  1. Two thousand one hundred specially designed coaches manufactured to meet needs of the differently-abled; aim to provide one such coach in each express train
  2. Standard of hygiene needs to be improved substantially; all out efforts will be made on this in the next six months; duty bound to provide high standard of services; special housekeeping body to be set up for stations and trains
  3. Railways to replace open discharge toilets with green toilets; 2,500 coaches will be equipped with bio-toilets next year. All Garib Rath trains to have one special AC.
  4. Coach for differently-abled persons. All out efforts to improve hygiene in trains and stations in next six months
  5. Special housekeeping body to be set up to maintain stations and trains. Improvement of passenger amenities at a cost of Rs.1,112 crore; regional cuisines to be introduced
  6. GRP / RPF personnel deployed on 3,500 trains
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  1. New passenger services: 820 new items; 75 new express trains; 21 new passenger trains; 75 new services in Mumbai suburban system.
  2. Guru Parikrama trains to be run to Amritsar, Patna and Nanded. Guru Parikarma special trains to cover Sikh pilgrimage centres of Amritsar, Patna and Nanded.
  3. 75 new, express passenger trains to be introduced and attempt to increase train speeds to 160 kmph; journey time from New Delhi to Kolkata can be brought down to 14 hours from 17 hours
  4. One hundred and fourteen new line surveys to be undertaken during 2012-13. New line projects to get Rs. 6,870 crore in 2012-13. Further, Targeting freight carriage of 1,025 million tonnes to bring in Rs. 89,339 crore; World Bank funding of Rs. 6,500 crore firmed up for dedicated freight corridors; land acquired for 3,300 km; first contracts to be handed out during 2012-13.
  5. Railways to carry 55 million tons more freight at 1025 million tonnes in 2012-13.
  6. Dedicated railway design wing at National Institute of Design with a contribution of Rs. 10 crore. Stress on strengthening safety. Has to be benchmarked with the best in the world.
  7. Special purpose vehicle to be set up on safety protocols.
  8. Independent railway safety authority to be set up as statutory safety body.
  9. Railway Board to be restructured, two more members to be included.
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  1. Surplus with railways at Rs. 1,492 crore in current year as against targeted Rs. 5,258 crore
  2. Excess of Rs.1,492 crore after meeting expenses / dividend payments not adequate for meeting costs of several projects.
  3. Finance Ministry agrees to loan Rs. 3,000 crore to Railways at 8.55 per cent interest: Trivedi.
  4. Investment of Rs. 1.70 lakh crore on rolling stock in next five years. Investment of Rs. 5.60 lakh crore required for modernization. Railways must attract 10% of the Rs. 20 lakh crore government expects to spend on infrastructure during 12th Plan.
  5. Railways expect gross budgetary support of Rs. 2.5 lakh crore during 12th Plan.
  6. Railways to invest Rs. 7.35 lakh crore during 12th Five Year Plan period (2012-17), a quantum jump from the Rs.1.92 lakh crore invested in previous plan period.
  7. Outlay of Rs. 60,100 crore during 2012-13, the highest ever.
  8. Railways will require Rs. 14 lakh crore in the next 10 years for modernisation
  9. Aim to bring down operating ratio from 90% to 84.9% in 2012-13 and to 72% by 2016-17. Focus during next five years on five areas: tracks, bridges, signalling, rolling stock and Stations.

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Says Source

Bansal is likely to announce the proposal for setting up of Rs 1,000 crore MEMU (Mainline Electric Multiple Unit) coach factory in Rajasthan to cater to the growing demand of more local and suburban trains. Railways will sign an agreement with BHEL and Rajasthan government soon for manufacturing about 400 coaches in a year. Aiming to put rescue and restoration work during accidents on fast track, the Rail Budget 2013-14 will announce procurement of two high-speed self-propelled accident relief trains (SPART). The SPART will enable rescue equipment to reach the accident site faster and help speedy rescue and restoration work.

Price hikes in passenger fare, a revise the freight rate further, maybe and about 100 trains, including AC double deckers, new passenger services and extension of services to cater to the demands of various states. So what is the focus on railways this year? 

The focus of the Rail Budget this year is on providing more amenities to passengers. 

Attempts have been made to cater to the demands of all regions including Northeast as there were representations for new trains from various states - sources in Railway Ministry

Here are the expected highlights on Railways Budget 2013-2014 in a nutshell:

  1. Further hikes in both freights and fares in the new budget
  2. Manufacturing of 670 new locomotives including 20 LNG locos and about 16,000 new wagons.
  3. 4200 new coaches including 600 LHB coaches in supposedly to be in the Rail Budget.
  4. Increase in frequency of popular trains keeping in mind the demand of people’s representative
  5. Maintenance, cleanliness and hygiene in trains and stations, Provision for quality linen, up-gradation of fire-fighting arrangements and new facilities for disabled person.
  6. Proposal to provide braille stickers inside coaches for assisting visually impaired passengers.
  7. 10 mechanised laundries to improve supply of clean and quality linens on trains.
  8. New measures for fire suppression system in AC coaches and pantry cars.
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Indian Railways have been experiencing a tough ride. During the recent past, the operating ratio has deteriorated from 78.7% to 95% and IR have never really shown an investor friendly attitude resulting in a complete lack of enthusiasm among investors. To top its initiatives such as Private Freight Terminals and Special Freight Train Operators have failed in attracting private capital in a big way. If IR really wants to break free cash-strapped it should restore the investors' and entrepreneurs' confidence by undoing some of its recent actions. The 16 - 31% increase in rail haulage charges specifically.

Further to make that happen the “ministry will have to use Railway Budget to address IR's core issues such as mobilizing resources, controlling costs and offering competitive freight structure with an environment friendly advantage to increase its share in the freight market.”

Although final figures have not yet been worked out, officials hints that Chidambaram is adamant to reign out the fiscal deficits. So, in a time when both private investment and consumer demand are weak, wouldn’t lower public spending deepen India's sharpest economic slowdown in a decade? The proposed cuts will likely reduce the outlay for the Railways Ministry by more than $2 billion on top of the $1.8 billion cut it faced this fiscal year. A senior official at the ministry said that, to compensate, the railways have been asked to raise rail fares and form joint ventures with state-run infrastructure companies.

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  1. Mr. Pawan Bansal is the Railway Minister. Last year it was Mr. Dinesh Tiwari.
  2. Railway is not PSU. Rather it is one of the most important Ministry of GOI.
  3. Railway transports almost 60% of general goods in India. 
  4. Indian Railway is second largest organization wrt track length, daily passengers & goods and no. of employees point of view, after China.

Indian Railways Budget: Main focus areas:

  1. Improvement of existing trains
  2. Improvement of existing routes
  3. Modernization of the Indian rail network
  4. Freight and passenger travel

How is Indian Railways Budget finalized:

  1. Discussions are held in Parliament to decide over policies and allocations that have been suggested in the Indian Railway Budget.
  2. A simple majority is required for Lok Sabha to pass the Indian Railways
  3. Comments made by the Rajya Sabha can be considered, but they are not binding in nature.
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1. What is Railway budget, why should I be bothered?
2. The best Railway Budget do not exist !
3. Budget Highlights 2012-2013 At a Glance
4. Last Year's Budget Highlight - Fare / Price
5. Last year’s Railway Budget Highlight - Services
6. Last year’s Railway Budget Highlight - Trains and Facilities
7. Last year’s Railway Budget Highlight: Funds Allocation
8. Hence what to expect from Railway Budget 2013-2014
9. The last rung on the ladder: Will the budget be beneficial to railways?
10. Railway Budget Trivia
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