Indian Rail Budget 2016: An overview
-Dr. Abdul Ruff
The Indian Railway Minister Suresh Prabhu is emerging as a BJP government’s positive face before the Indian common masses that use rail system frequently for their daily livelihood and less privileged people who use rail for their essential existence.
On February 25, rail stocks witnessed a mixed trend in an overall sluggish broader market ahead of the Rail Budget to be announced later in the day. Stone India went up 5.51 per cent and Titagarh Wagons gained 2.62 per cent on BSE.
In not raising the passenger fares and fright charges dynamic Railway Minister Suresh Prabhu chose not to take the bitter pill of fare hikes in the 2016 Railway Budget, and vowed to continue with his big investment-push to turn around Railways as a major engine for India’s economic growth.
BJP is known for its pro-rich policies and ignore the genuine concerns of common people. Prabhu has made a serious effort to remove the anti-poor image the Hindutva parties suffer from. Corporate lords are eager the BJP government raised the fares of train. By declining to add more financial burden on the common people for whom rail is an essential mode of transport, Prabhu announced several initiatives to expand railways’ reach and efficiency. These include creation of dedicated rail corridors, improving railway infrastructure and revamping the suburban railways system. In fiscal year 2017, there are 44 new partnership projects planned covering 5,300 km worth Rs 92,714 crore and creation of two locomotive factories with a total investment of Rs 40,000 crore.
The big question remains without hike in fares can Prabhu address the constrained balance sheet of the railways, particularly in the face of a massive spending burden on account of 7th Pay Commission implementation, cost over-run of delayed projects and other expenses. Prabhu expects Rs 1.5 lakh crore help from LIC over next five years and going overseas with Rupee bonds to raise funds.
Already, railways already felt the heat of subsidizing passenger fares with freight segment, a strategy criticised by most experts. Prabhu has hinted that the freight rates will be revised. In 2015-16, railways has suffered a loss of Rs 30,000 crore on account of subsidizing passenger fares. Gross budgetary support, Prabhu expects, to be around Rs 40,000 core in FY17. Prabhu has set a gross traffic earnings target of Rs 1.85 lakh crore.
Prabhu’s rail budget shows the government’s intent to transform Railways as a crucial engine to economic growth and change the country as a high-growing manufacturing economy among emerging markets. Prabhu has increased the investment target for fiscal year 2017 to Rs 1.21 lakh crore, up 21 per cent, as against Rs 1, 00,011 crore in last year. This, however, is less than a jump of 52 percent budgeted last year. Prabhu wants to achieve an operating ratio of 92 per cent in 2016-17 as against 90 percent this year (budget estimate 88.5 percent).
But the real concern is on the implementation front. The government’s own estimates show that, as on 1 January, maximum cost overrun was seen in railway projects with the anticipated cost of 27 projects climbing to Rs 79,140.68 crore from the original cost of Rs 22,680.85 crore.
What this means that aggressive expansion plans sans the determination to implement on time would hardly help. This is where Prabhu should put his foot down and make sure that the expansion strategy doesn’t remain on the paper.
Beyond the numbers, there are several key takeaways in Prabhu’s second Rail budget
Railway Minister Suresh Prabhu’s hour-long speech in Parliament met with mixed political and social media reactions, getting both effusive praise and disparaging criticism. In the budget, Prabhu had mentioned a slew of new initiatives, including unreserved trains, WiFi in trains, provisions for children and senior citizens. However, not everyone was convinced with the railway minister’s offering.
Here are some of the quick reactions to the railway budget- PM Narendra Modi- “I extend my congratulations to Suresh Prabhu and Team Railways for the budget. There is a shift in policy in the budget, which will lead to a paradigm shift for India,” the Prime Minister said. Maharashtra Chief Minister Devendra Fadnavis on Thursday hailed the Railway Budget presented by Union Railway Minister Suresh Prabhu, saying that it caters to the needs of every citizen and every sector.
In an usual style of pun filled criticism, former Railway Minister Lalu Prasad Yadav reacted to Railway Budget 2016. “Railway patri say utar gaya” ( Railway has slipped down from the track) flaked Lalu. In his usual style Lalu said the budget was light weight and there was nothing in the budget. (“Itna halka tha, isme kuch nahi tha”)
Pawan Bansal: The former railway minister said that there was nothing new in the budget, except for the announcement on bio-vacuum toilets. “The announcement on two locomotive factories is also old; it was decided when I was the railway minister,” he said. Prakash Javadekar- The senior BJP leader said, “It was overall a very good budget. I will give it 9 out of 10 marks.” However, he did not mention what he deducted one point for.
Shares of Hind Rectifiers plunged 6.22 per cent and Kalindee Rail Nirman Engineers fell 4.59 per cent while Kernex Microsystems was down 4.49 per cent and Texmaco Rail & Engineering 2.89 per cent. These stocks saw a bout of volatility before Railway Minister Suresh Prabhu’s budget presentation today. Meanwhile, in the broader market, the benchmark BSE Sensex was trading on a flat note, up 19.98 points, at 23,111.66 at 1100 hrs.
The Railways has earned Rs 1, 36,079.26 crore as against the target of Rs 1, 41,416.05 crore in April-January of this fiscal, a decline of 3.77 per cent.
Whether or not it was a mere coincidence, as the rail minister Suresh Prabhu was presenting Rail Budget 2016, a Hindi film actor Sanjay Dutt who was undergoing jail term for nis “terror links”, was released form jail and he took a flight to Mumbai to reach his relatives and friends who want to celebrate. Sanjey was not hanged as it happened to Kashmiri Afzal Guru, notwithstanding his Muslim connection as his actress mother Nargis was a Muslim. He spent his jail term and is now free.
Surely, PM Modi is not interested in raising the rail fares and fright charges. The Modi government has spared common people from slapping on them additional money burden. Further passenger amenities are a boon to the passengers in ordinary classes.