Railway Budget 2016: If Only I Could Say ‘What An Idea, Prabhuji!’

The best part of the Railway budget was that it was bereft of the usual hype and hoopla, writes Gautam Mukherjee.

Competent, path-breaking, and far reaching as this budget might appear with most commentators giving it 7 out of 10, there were no out-of-the-box surprises. (Photo: The Quint)

The Modi government’s second railway budget reiterated its new approach and ambitious outlook, with an emphasis on modernisation across the board.

The tone of this budget was energetic and futuristic. And for the first time ever, it had an implementation report as annexure 2, based on promises made last year – 139 of which are at different stages of implementation.

Union Minister for Railways Suresh Prabhu with MoS Manoj Sinha arrives at Parliament for presenting the Railway Budget 2016-17, in New Delhi on Thursday. (Photo: PTI)

What’s New?

The 2016 budget unveiled some new types of trains: Fully unreserved, air-conditioned all 3-tier ones; those that will travel at 130 km/hour or faster with newly designed coaches; double-decker trains that can carry 40% more people.

The strategic departure is in how the railway is rapidly connecting the North East, with broad gauge trains to Mizoram and Manipur.

Freight, the cash cow of the railways, will be enhanced with 25-tonne axle load wagons. Implementation of the first two of the freight corridors project by 2019, aimed at facilitating faster goods movement reflects a drive to recapture the dwindling market share.

Revenue Target Too Ambitious?

There is a plan to connect ports and highways to trains, a Diamond Quadrilateral to complement the Golden Quadrilateral. Also, an auto-hub is coming up in Chennai to help transport cars.

Two new locomotive factories in Bihar will be built soon. The electrification budget is up by 50% , and 2,000 km of tracks will undergo electrification in 2016-17, alongside another 2,800 km of new tracks.

Prabhu announced a stretched revenue target of Rs 1.85 lakh crore for 2016-17. And this is to be delivered via an operating ratio of 92%, up from 90% presently. This ratio is slightly up to make space for the 7th Pay Commission, an additional Rs 28,450 crore, for the 2.6 million railway employees and pensioners.

The minister plans to revamp the bureaucratic Railway Board to improve performance and wants to introduce zero-based budgeting.

Porters listen to the rail-budget speech of Railways Minister Suresh Prabhu through a radio set in Moradabad on Thursday. (Photo: PTI)

Highlights of the Railway Budget

• The budget struck the right chord with a one-of-its kind implementation report, revealing the status of 139 projects.
  
• Focus on providing better service to the customers, evident from the announcement on new types of trains with increased carrying capacity.
  
• The minister plans to revamp the Railway Board to improve performance and wants to introduce zero-based budgeting.
  
• Prabhu continues the modernisation drive, incurring an expenditure that is higher than the erstwhile UPA government.
  

Is Prabhu Better Than His Predecessors?

Over the last year, the railways have not been able to achieve its freight revenue targets, but this was largely offset via operational savings and lower fuel bills.

But still, the ministry does have some momentum: Over the last year, 44 new projects, worth Rs 28,000 crore, were awarded, compared to just Rs 13,000 in aggregate in the previous six years. Prabhu continues the modernisation drive, with a capital expenditure budget of Rs 1.21 lakh crore, up by 20%, and more than double the  average of Rs 48,000 crore annually, compared to the UPA years.

This capital expenditure is the key ingredient to the revival strategy of the Railways, announced as part of the Rs 8.8 lakh crore to be spent over five years. But to kick in Rs 2 lakh crore each for the remaining three years of this government’s tenure may be daunting, unless, of course, new revenue streams are found.

The government will provide Rs 40,000 crore towards this year’s capex again, as it did last year. A financial investment from LIC has also been secured for Rs 1.5 lakh crore, albeit disbursable over 5 years, but on excellent terms, as per the minister.

People watching the rail budget speech of Union Railway Minister Suresh Prabhu on TV sets in Amritsar on Thursday. (Photo: PTI)

Ranking the Railway Budget

The minister also indicated that a concerted effort will be made to realise at least 20% of future revenues from non-tariff sources such as advertising on railway property/stations, and judicious monetisation of railway land in innovative ways. Comparable railway networks abroad do obtain about 30% of their income from non-tariff sources.

For the first time, the Indian Railways is also actively seeking collaboration with various states, and while 17 states have shown interest, 6 MOUs have already been signed.

The bullet train from Mumbai to Ahmedabad, with Japanese collaboration, was also mentioned, as a force-multiplier, and in terms of technology as well as the know-how and skill development.

Prabhu plans to build bio-toilets on every train, (up from the 17,000 already done), do away with dangerous unmanned crossings altogether, renovate over 400 stations, vastly improve cleanliness, introduce Wi-Fi, e-ticketing, FM radio, wheelchairs, hand-held ticketing, phoned-in cancellations, dustbins, CCTV coverage, better class catering etc.

Speeds will increase all around; freight up to 50km/hour and express trains up to a minimum of 80 km/hour. The Railways will be integrated with other modes of transport. Its extensive data mining might be monetised too. There will be two elevated suburban corridors created in Mumbai, and other city metro networks will expand too.

But all in all, much of this is not news. Competent, path-breaking, and far reaching as this budget might appear with most commentators giving it 7 out of 10, there were no out-of-the-box surprises.

(Gautam Mukherjee is a plugged-in commentator and instant analyser.)

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