Rail Budget

Increase in the freight ratesItemsFreight Hike(%)New-Old Rates (INR)

Grains, pulses, urea10-

Coal6.3769 (723)

Cement2.7806 (785)

Steel/Iron0.81391 (1379)

Railways freight charges are highest in the world.As a result, it has been losing traffic to trucks over the years. From a market share of 65% in goods movement in 1986-87, the Railways' share has come down to 30%, while that of the road sector has gone up from 34% to 60% during this period.

The budget decision to hike freight rates would further push railways out of competition and would lead large amount of freight traffic towards other means of transport.

The freight hike announced in the budget will also increase the prices of essential commodities and power as these hikes pertain to urea, coal, cement and steel. Coal freight hike will impact a range of critical industries such as power, steel, iron ore and cement Cement About 50% of total cement freight in the country is carried by railways. Further coal forms around 55% of power and fuel costs involved with the production of cement. So even the companies who do not use railways for the cement transport will be impacted adversely. The cement prices are likely to increase by Rs. 5-7/bag. Aluminum A production of one tone of aluminum required 6-7 tonnes of coal. Further, Aluminum and power companies are already facing high cost of captive coal after aggressive bidding in the first phase of coal mine auctions. This hike in coal transportation costs will only add to their cost woes.

The Minister proposed awarding large number of civil and system contracts for Dedicated Freight Corridor, but no deadline were announced for completing these projects.In absence of any blueprint, the budget seems high on vision and small on implementation plans.

No decrease in fares despite decline in the Diesel prices The fact that the railway minister has not hiked the passenger fares is appreciated, but people were expecting the fares to be lowered because of the huge decline in the diesel prices in the international markets.

Earlier the Center had informed that the fares will decrease with the decline in the crude oil prices, but the government failed to live up to its promise. Also it is strange that certain ministers are taking credit for not hiking the rail fares.

Administrative failure The railways lose thousands of crores every year due to administrative delays, payment non-recoveries and irregular application of railway freight rules and irregular grants of trainload rates. But the budget offered no measures to mitigate these issues.

Uncertainty of Private Investments At present, Indian railways has a backlog of around 359 projects with the investment requirement of Rs 1.82 lakh crore. In the last 30 years, out of 676 sanctioned projects only 317 have been completed at a cost of Rs. 1.58 lakh crore.

Amidst this, the Railway Minister has proposed an ambitious target of bringing in investments of Rs. 8.5 lakh crore over the next five year. Considering that the under-investment has been a persistent problem in the Indian railways, it would have been better had the Minister provided details on the mobilization of funds.

The budget envisages a bigger role for private players in modernizing stations, freight handling, electrification and rail connectivity. However, the railways track record of Public-Private Partnership has been dismal. The PPP model so far has been that the public sector bears the risk and the private sector walks away with profit; such a model will spell disaster for the railways.

Also, it would have been better had the Minister first resolved the implementation problems being faced by private players, instead of setting up one more (Financial) cell to increase its revenue.

During my tenure as railway minister, I had roped in a number of states like Jharkhand, West Bengal and Karnataka for identified railway projects in which the Centre also made contributions. But the railways can only depend on states for one or two small projects, certainly not for large ones. Nitish Kumar

Centre-state venture The Minister said he would like to engage states as partners in railway projects. But there is no action plan on how he wants to go about it. Also this idea has already been tried before and has not met much success because there are no monetary incentives for state governments.

The ministers comment, that since the Fourteenth Finance Commission has provided more resources to the states, they will be willing to invest in railway projects, is just pretentious.

Bullet/High-speed trains Continuing the announcement made in the last budget, the Minister informed that studies were being commissioned for high-speed routes on the diamond quadrilateral. However, it failed to mention that the partnering foreign agencies have not found even a single bullet/high-speed train to be feasible so far. The Mumbai-Ahmedabad bullet train project too has stuck after the Mumbai Metropolitan Region Development Authority refused to part their land for the project. On an average the cost for the bullet train will come to about Rs.100 crores per kilometer

No new trains for Northeast The Northeast region already lags behind other states in several development parameters, including the connectivity. The eight sister states have one of the worst road network in the country and almostallNE states have raised concernsabouthigh airfares.

Considering above, it was expected that new trains would be announced to bring the region to mainstream, especially after the PMs latest thrust to develop north-eastern states. Also extending train services to remote areas would not only have served the common people there, but would also have helped the country from the defence point of view.

1.4 lakh croreAnnual revenue of railways every year

1 lakh crore Railways got this year from the Central government as budgetary support

26,000 croreAmount of losses railways incurs every year on subsidizing passenger fares

2.3 croreNumber of passengers railways carries every day

13.1 lakhNumber of people employed in the Indian railways (country's biggest employer)

67 %Contribution of freight in railways earnings

94%Railways' operating ratio (It saves 6 paise on every 1 rupee it earns)