Setting Railways’ finances in order during the next fiscal will be his top priority

The Railways have a well cut out job of raising revenue for keeping the mammoth organisation afloat in 2013-14. How Pawan Kumar Bansal does this will be the highlight of the Railway Budget he will present on February 26.

In the face of a steep hike in the price of diesel for bulk purchasers, and the dim gross budgetary support expected from the financially limp government, Mr. Bansal’s only way out is to be innovative in raising both tariff and non-tariff resources. On that will depend the extent to which the Railways meet their working expenses, reduce their operating ratio, save for development and safety aspects and better amenities for its growing number of passengers and chug along to meet the future challenges. Setting the Railways’ finances in order during the next fiscal will be his top priority.

The Railways have set up a steering group to shore up resources in order to generate funds to meet internal requirements and to fund capital expenditure through other sources. Mr. Bansal’s speech would indicate what the committee suggested and the extent to which the Ministry accepted them.

It remains to be seen whether Mr. Bansal hikes fare and freight charges again to offset the increase in the fuel bill by over Rs. 3,000 crore due to the diesel price hike or if he exercises this option after the budget. Will the declining air fares impact his decision here?

The Minister needs to raise money, as achieving the budgeted target of revenue from both the freight and passenger segments seems distant during the current financial year. Most of it has to come from extra budgetary resources as generation of internal resources is already under pressure because of the burgeoning fuel bill.

With the fuel bill taking a toll on the projected internal resources during the current fiscal and with no respite likely in 2013-14 either, the possible generation has been estimated in the range of just Rs. 7,000 crore the next financial year.

This is likely to cap the annual plan allocation, as the Centre is unlikely to concede the demanded general budget support of Rs. 38,000 crore for the next financial year.

The grant during 2012-13 was Rs. 24000 crore and the generation of international resources has been revised downwards to Rs. 10000 crore from the target of Rs. 18000 core, thus forcing reduction in the plan expenditure to Rs. 51000 crore from the budget target of Rs. 60000 crore.

The Centre has promised Rs. 1.94 lakh crore support during the 12th Plan, but the plan size is unlikely to see a big jump this year. The Railways have to find other ways and means such as commercial leasing and licensing of land, getting private players to executive infrastructure projects and reducing the dependence on diesel locomotives to tide over its financial requirements.

A new policy has helped receive about 40 proposals from the private players. The budget proposals might indicate how many of these have been finalised.

Rail Land Development Authority under focus

The Rail Land Development Authority will be under focus on how many multi functional centres and commercial sites it can develop and fast track modernisation of railway stations to raise non-tariff revenue during the next financial year. Unlocking land value is also top on the Railways’ priority list.

Speeding up electrification of rail tracks is another area of top priority as it could cut down the diesel bill. Mr. Bansal is expected to announce three projects to electrify the routes connecting Delhi with Ahmedabad and Jaipur. The three projects covering 1087 km of rail track will cost Rs. 1121 crore. On completion in March 2018 it will save Rs. 522 crore on the diesel bill. The completion of electrification of a major section of the Delhi-Howrah route recently will also allow increased train speed by up to three hours, thus allowing the introduction of new trains.

Other efforts at increasing heavier haul of goods trains will also give the Railway Minister the scope to not only increase the speed of some trains, but also add a few more on these routes. The Ministry intends to add 45 heavy haul trains during the next financial year and to facilitate this Mr. Bansal is expected to announce the extension of about 50 loop lines to the required length of 1.5 km to park these long trains when not running on the tracks.

Apart from newer and faster trains, Mr. Bansal’s basket is expected to contain at least four to five new dedicated freight corridors and his strategy to utilise the increased capacity to carry freight on these tracks as also to run more passenger trains once the freight trains are moved out of these tracks.

The Minister will unveil plans for more wagons, coaches and locos, besides and how the Ministry intends to go about meeting the deadline set by Prime Minister Manmohan Singh for the execution of the Rs. 21000 crore elevated Rail Corridor in Mumbai, the eastern and western dedicated freight corridors, and the electric and diesel locomotive factories in Madhepura and Marhaura in Bihar. The Prime Minister’s directive also included setting up a Rail Tariff Authority to decide on passenger and freight rate hikes in tune with the volatility in diesel prices and cut down the financial burden of railways.

If the money comes then you can expect the Indian Railways to pay attention to issues of safety and amenities of passengers.