Rail budget likely to provide blueprint to revitalise network
REDUCTION IN FARES UNLIKELY AS PRABHU GETS READY TO PRESENT HIS FINANCIAL PLAN
Railway Minister Suresh Prabhu is set to present his maiden budget for the department today amid expectations of a clear road map to re-energise one of the largest railroad networks in the world that’s been floundering in recent decades due to a mix of political populism, lack of vision and funds crunch.
The latest railway budget evokes particular interest as it comes six months after Prime Minister Narendra Modi’s government allowed 100 per cent foreign equity in some bigticket projects of the railways, promising it to be a gamechanger for the 162-year-old network.
Yet, one aspect of the budget is a foregone conclusion — there will be no lowering of fares. “It won’t be done. Fares are already low and government is giving subsidy,” Minister of State for Railways Manoj Sinha said.
An across-the-board hike has also been ruled out by some senior officials, given the near 15 per cent increase in passenger fares and 6.5 per cent in freight last year. So it will be interesting to watch how the railway ministry proposes to raise money, given the limitations of market borrowings.
Railway Minister Suresh Prabhu has also rejected the idea of a reduction in passenger fares consequent to the lowering of diesel prices following the steep decline in international crude oil rates. Falling oil prices have saved billions of dollars in subsidy spending, but Finance Minister Arun Jaitley is under pressure to prevent the fiscal deficit from crossing the target of 3.6 per cent of the gross domestic product.
Great expectations
Prabhu, a chartered-accountant-turned politician is also expected to chart the path for his political boss Modi’s pet projects, notably bullet trains, dedicated freight corridors, as well as foreign and domestic private equity participation.
The latest rail budget comes at a time when its finances and efficiency are, perhaps, at their worst — as measured by a common parameter, the operating ratio. It suggests how much money is spent on day-to-day operations to earn the revenues, giving an indication of the funds left for safety and expansion. India ranks among the worst networks on this count.
A day ahead of the railway budget, stocks of companies associated with the transporter turned volatile. At the Bombay Stock Exchange (BSE), shares of wagon-maker Texmaco Rail and Engineering closed 2.90 per cent down at Rs139.20 (Dh8.2) from its previous close of Rs143.35.
Stocks of another wagon manufacturer, Titagarh Wagons, declined in the day’s trade, ending 6.19 per cent down at Rs579.20 from its previous close of Rs617.40.