The industry has reacted to Railway Budget 2016-17, and most of them have noted the proposed improvements and developments.
Dr. Mahesh Y Reddy
Infrastructure Industry and Logistics Federation of India (ILFI)
The Railway Minister has done delicate balancing by re-imagining railway operations to make it among the best in the world and at the same time proposing to meet the increased expenses mainly by monetizing the assets at its command and borrowing from multilateral institutions and national sources like LIC.
ILFI Director General said,” the very intent of the railway minister to spare freight rates and passenger fares from increases and to look inwardly for resource mobilization for funding its ambitious plans is a welcome follow up of his last year Budget.”
The minister, Dr. Reddy said, has proposed many ambitious projects including the setting up of two locomotive factories with an order book of Rs. 40,000 crore, modernization of railway network involving Rs 8.5 lakh crore over five years along with a massive electrification program. Financing these would no doubt require significant resource mobilization both from India and abroad. The minister has rightly pointed out that corporatization of the operations of the railways is inevitable to attract investors and lenders. “Better performance of the railways as reflected in its balance sheet can send the right signals to the foreign and domestic investors. A sense of urgency and time-bound implementation of the projects should permeate entire spectrum of railway operations” he added.
That the railways are taking appropriate steps to regain the lost share in the freight movement from the road transport is welcome development. Interestingly, the Railways have kept the revenue earning traffic at 1.84 lakh crore. “ The proposal to introduce time tabled freight trains by 2020 is a proactive step, that can trigger higher volumes of freight movement forrailways. Every effort should be made to press into services such specialized services without any loss of time.
“It is an extremely pragmatic Rail Budget based on the three critical strategy-pillars, aimed at making railways the backbone of India’s overall development. We compliment minister for his initiatives towards improving the quality of customer experience, overcoming challenges and making railways an engine of employment generation and economic growth”.
The rationalization of freight policy and review of PPP policy framework would help to attract private players for transforming rail transportation and increasing the revenue, Mr Neotia added. Initiatives towards developing an integrated railway network, greater emphasis on dedicated freight corridors, and improving port connectivity as well as north-east connectivity would go a long way in expanding the freight business. Also, commendable are the measures for improving quality of travel (both unreserved and reserved), cleanliness drive through additional 30,000 bio-toilets, stress on non-fare revenues through station redevelopment & monetizing land along tracks, greater participation of state governments in implementation of railway projects through joint ventures, FICCI President observed.
“It is significant that to ensure 100% transparency in all its operations, all procurement including procurement of works has moved to e-platform, and the process of conducting recruitments online would be extended to all positions. Further, all facilities will be integrated into two mobile apps. All these initiatives are very important and in line with Prime Minister’s Digital India programme”, Neotia pointed out.
This budget has laid down the roadmap for developing next generation railway infrastructure including high-end technology to improve safety, higher average speed of freight trains and high-speed passenger trains, FICCI stated in a release issued today.
Managing Partner, BMR Legal
Having an effective administrator with a remarkable track record in Suresh Prabhu has been a huge positive for the Indian railways over the past eighteen months since the NDA government came to power. Minister Prabhu’s fresh approach to ushering in commercial accounting is laudable, although dwindling resources present challenging economics, and lesser room to maneuver for the Minister.
Subdued growth in revenues – both passenger and freight – presented a compelling reason for another increase in fares, but Mr Prabhu didn’t give in to hiking fare as an easy solution to resources woes. Instead, he has proposed enhanced revenue mobilization through more innovative means. Proposal to develop a new freight tariff structure to evolve a competitive rate structure shall help railways regain market share vis-à-vis other transportation modes, particularly roads. Proposal of generating 10 to 20 percent revenues from non-tariff sources predominantly through asset monetization is a significant leap in revenue mobilization endeavors. On the cost side, the proposed operating ratio at 92 percent for FY ’17, is fairly reasonable target after all, in a year without fare hike and indispensable increase in variable costs.
Besides, expectations from 2016 Rail Budget largely surrounded promise of capacity additions to prevent losing market share to road transportation; structural reforms in incurring capex, and focus on project completion rather than rolling out new projects. Mr Prabhu toed pretty much the expected line as he set out a three-pronged strategy consisting in principles of ‘reorganize’, ‘restructure’, and ‘rejuvenate’ for overhauling the operating efficiency of railways. Significant increase in capex – projected to double from the average of previous year – should facilitate modernization of railways. On expected lines, the budget proposed to leverage the flagship Make-in-India program by proposing 2 new locomotive factories to be set up. Impending financial closures for all bankable rail projects is a big push for initiatives towards funding capacity addition. An agreement for long term financing at favorable terms by LIC is a big draw, and should take the burden off the government finances for building new projects.
Having achieved an increase in commissioning and not completing the tracks, He has laid down an ambitious target of 7 Km from 4.3, 13 in 17-18 and 19 in 18-19. The government clearly seems to be driven by improving the customer experience and that in my view would enhance the fortunes of this important engine of growth.
Amongst key misses, last year’s announcement about a 5 year investment plan of 9 lac crore didn’t find any mention; finally, with an intention to build accountability, Mr Prabhu had added an Annexure to the budget highlighting the outcome and accomplishments.
Overall, Prabhu does a fine job of striking a fine balance between progressive measures, without falling for geo-political give‑aways in the form of new trains. The budget thus takes forward key principles set out in his last budget, ie de-congesting rail network and making Indian railways a world class infrastructure.
NASSCOM welcomes the technology focused initiatives that were announced as a part of Shri. Suresh Prabhu’s Railway Budget 2016. We are glad to note that the government is walking the talk on IT integration and deployment of e-services, to achieve the dream of Digital India. Aimed at showcasing a positive future for railways in India; the inclusion of GPS based digital displays in coaches, and the setting up Wi-Fi internet in 100 station this year, are initiatives that will not only streamline services in the railways, but also benefit customers across the board. The minister has also announced the utilization of drones for remote monitoring of on-going projects, which is an imperative to ensure timely completion of projects. With the railways, ready to take the next leap in setting high speed rail networks, these announcements are testimony to the centre’s commitment towards the upgradation of services; giving the transportation lifeline of India its due.
Additionally, the setting aside of ₹50 crore for providing innovation grants to employees, start-ups and businesses is an holistic and commendable approach towards scaling up the innovation and entrepreneurial landscape in the railway sector.
“The Railway budget 2016 is in line with the government’s vision of achieving holistic growth of the Indian Railways. It is very heartening to note that the government is focused on developing railway infrastructure with renewed vigour and is targeting a capital expenditure of Rs. 1.21 lakh crore for FY. 16-17; an increase of 20% YoY. The indigenous steel sector will be the beneficiaries of the enhanced investments in railways and these developmental initiatives augur well for the industry.”
MD & CEO Ambuja Cement
Overall, the Railway budget is a good one. This year there was no hike in freight fares which bodes well for the cement and coal industries. Today was Railway Minister Suresh Prabhu’s second rail budget and it displays a positive approach towards tackling issues, a commitment towards quality management and an attempt to make structural changes. Despite a tough financial and economic situation, customers have been spared from any fare hike. We welcome the announcement made on expanding the freight basket of IR, wherein it is proposed to start a time-tabled freight container, parcel and special commodity trains (on a pilot basis), container sector that would be opened to all traffic (barring coal, specified mineral ores and part-loads) during the non-peak season. All existing terminals/ sheds would be granted access to container traffic, where feasible.
The Manufacturing sector will also benefit from Rationalising the tariff structure – to undertake review of tariff policy to evolve a competitive rate structure vis-a-vis other modes, permit multi-point loading/ unloading and apply differentiated tariffs to increase utilization of alternate routes, explore possibility of signing long term tariff contracts with our key freight customers using pre-determined price escalation principles.
MD & CEO Ambuja Cement Past President CII, Chairman, Sr. MD, DCM Sriram, Shriram Bioseed Ventures
Great to see Vision 2020 articulated and benchmarks set. It is positive that the Railways will now move into the implementation phase to upgrade and modernize the entire system. The proposed capital expenditure, increase in commissioning of new lines, additional freight corridors and most importantly completion of existing projects, will not just increase the capacity of the railways but will improve the country’s overall infrastructure, and kick start the investment process. Further it will address the need to increase employment.
The steps outlined in process improvement, provision of internships, using railways stations for skilling, provision of Wi-Fi, introduction of water recycling at stations, will all help in sustainable and long term growth of the Railway.
Musafir Namah Bureau