Railway Budget 2014: Industry expects cosmetic Budget with Growth Orientation from UPA-II

Faced with a revenue shortfall, Railway Minister Mallikarjun Kharge will not bring about reduction in basic passenger fares in the interim budget.New Delhi:  The UPA 2 will present its interim Railway Budget on Wednesday, with a change in fares unlikely. It is the last Rail Budget for the UPA 2 before the Lok Sabha elections and the past five years have been a turbulent phase. The question is whether things are on track.

This will be the last budget of the most turbulent phase of the Indian Railways. The two parties that ruled the railways in the past five years blame it on each other.

“Pawan Bansal was accused of bribery, Mallikarjun Kharge is of no use, both spoiled the railways,” said Trinamool Congress MP Saugata Roy. But Congress MP Oscar Fernandes has said that Railways is on the right track. “Railways is on track as development is taking place,” Fernandes said.

In the past five years, the Rail Bhawan saw six new ministers. For the first time in 17 years, the portfolio went to the Congress. Pawan Bansal did end 10 years of populism by announcing a hike in passenger fare, but soon exited on charges of corruption.  The episode shook the Railways raising questions over the system, which most saw as opaque. Experts say the Railway Board is equally responsible for derailing the Railways.

“What stops them from expanding the dedicated freight corridor, there are no new ideas, old systems are more than 90 years old,” said former Railways member Sumant Chak.

As the ministry prepared for the last budget of UPA-II, sources have told that it will be a cosmetic budget but with growth orientation.

Over 20 premium trains could be announced. The Railways are likely to take up about 1500 km route for electrification in the next fiscal. Currently, only about 24,000 km is electrified out of the total 65,000 km route. With increase in fire on trains, announcements are expected for new safety mechanisms and expansion of passenger reservation system for ticket booking.

In 2009, the then railway minister Lalu Prasad, had announced a 2 per cent passenger fare cut. But given the current dismal financial scenario, all eyes will be on Railway Minister Mallikarjun Kharge to see if he will announce any such populist measure.

Expectations from Railway Budget 2014:

We take a look at ten things that you can expect from the Railways Vote on Account 2014:

1) Fares: There are indications that passenger fares may not be touched barring minor changes in a few segments in the first rail budget to be presented by Kharge.

In a bid to give passengers relief from the impending fare hike in April due to implementation of fuel adjustment component (FAC), Kharge is likely to make some adjustment in FAC so that impact on passenger fares is minimum.

2) Safety Measures: Better passenger amenities and safety are expected to be on top of Kharge’s agenda. He is likely to announce measures to enhance safety for passengers such as installation of fire safety system, use of fire-retardant material in more trains while announcing implementation of Train Collision and Avoidance System (TCAS) on more routes.

3) Passenger Friendly Mesaures: He is expected to focus on more passenger-friendly measures like installation of upgraded real-time train information system at stations and operation of automatic ticket vending machines at many stations.

4) Premier Trains: The announcement of running 20 premier trains on dynamic fares as a step to arrest the fall in passenger revenue is likely to be made.

5) More Trains, New Lines: Kharge is likely to announce more trains, new lines and better passenger amenities in the interim budget.

6) Growth Oriented: Railway Ministry sources said it will be a growth-oriented budget and not a deficit one despite fall in earnings. Freight and passenger earnings have shown a decline during the April-December 2013 period. While freight earnings are short by about Rs 850 crore, the decrease in passenger revenue is about Rs 4000 crore.

Though the then Railway Minister Lalu Prasad had announced a two per cent fare cut in passenger segment in the interim budget of 2009, Kharge is unlikely to do so now given the dismal financial scenario.

7) Electrification: The interim rail budget will also focus on electrification of more routes so that dependence on diesel is less. Railways are likely to take up about 1500 km route for electrification in the next fiscal. Currently, only about 24,000 km is electrified out of the total 65,000 km route.

8) Progress Report: In his first budget presentation, Kharge will talk about the progress and development work undertaken by the national transporter in the last ten years.

Since Lok Sabha elections are around the corner, there are demands from many zones and MPs for new trains and Kharge has conceded to some demands. As a result, survey of new lines, extension and increase of frequency of certain train services are also to be announced in the vote-on-account statement.

9) Project work: The vote-on-account is likely to mention the expeditious work on coaching complex for maintenance facility at Gulberga.

On the mega project front, Kharge will mention the speedy work on dedicated freight corridor and work sanction on the 66 km long Mughalsarai and Sonnagar link as part of the project.

10) Revenue: Kharge has expressed serious concern over falling revenue and categorically asked officials to undertake all possible steps to arrest the further fall in earnings in the recent General Managers meeting.

While the working expenses have gone up by about Rs 5,000 crore during April-December period, the revenue earnings have decreased by over Rs 4,000 crore.

Though Railways have set a target of reaching 38 per cent of total cargo traffic in the 12th Plan, the cargo share of railways is expected to fall by two to three per cent this year. There is also a fall in passenger bookings during April-December period which is a cause of worry for the national transporter.

Kharge, perceived to be a reformist, has taken many bold steps to increase the revenue like allowing fuel adjustment component in passenger and freight fares, increasing Duronto fares and revising Rajdhani catering charges.