Tracking industry views on Rail Budget and its short and long term impact

Railway Budget occasions have been used over the years to announce much-hyped projects, with hardly any reaching the completion point. The Rs 1,49,176-crore Rail Budget presented by Ralway Minister D.V.Sadananda Gowda was devoid of any (except for plan to run Bullet train between Mumbai and Ahmedabad). It emphasised on timely completion of projects (new as well as old), bringing in transparency, cleanliness, passenger safety, etc. Budget may have disappointed people who have been expecting big-bang announcements. But, its focus on practical issues concerning railways and its users may prove to be beneficial for solving long-term challenges facing the railways.

Here is what industry experts have to say on the Railway Budget…

Arvind Mahajan KPMGArvind Mahajan, Partner and Head of Infrastructure and Government Services, KPMG in India:

Indian Railway Budget this year is definitely a significant departure from the past in terms of focus on passenger amenities, adoption of technology, capacity building and commercial soundness. Focus on passenger amenities gets a significant boost compared to the past and the facilities hereto available at airports only will be now be available at the railway stations. The introduction of bullet trains, high speed trains, upgradation of IT infrastructure including next generation e-reservation system are the steps in the right direction and addresses the long felt need of modernising the Indian Railways and making it customer friendly.

We also welcome the steps for creation of project management unit at Railway Board, Railway University, strategic procurement policy including procurement towards capacity building and long term robustness of Indian Railways operations. While there was discussion on PPP and FDI in Indian Railways, the budget speech lacked details and the announcements in the coming weeks will be important to understand the specifics. Having said that it is the step in right direction and it will be to the benefit of nation at large that these steps are implemented sooner.

What we missed was any discussion on Railway Tariff Authority as it is critical for attractive private investment in Indian railways. Overall, the Railway Minister did touch upon key aspects and has shown the intent to turnaround Indian Railways into a commercially viable and customer friendly organisation but the specifics of few announcements are awaited.

Nadir GodrejNadir Godrej, Chairman, CII National Committee on Chemicals, and Managing Director, Godrej Industries:

The chemical industry welcomes the Railway Budget, which is aimed at bringing a new life to railways as well as industries dependent on it. We welcome the fact that the Railway Budget 2014- 15 emphasises technology and customer satisfaction. We are particularly appreciative of dedicated freight corridors on the Eastern and Western sectors of the Golden Quadrilateral.  These freight corridors will help advance the growth of the developing parts of east and north east India- learnings can be taken from the western corridor. The chemical industry also welcomes the initiative by the ministry of increasing port connectivity by rail in PPP mode.

Movement of goods from and to ports is critical- this will surely help create jobs in the export sector in inland locations having rail connectivity. Special emphasis on the development of logistics will not only help movement of fertilisers and large commodities and give flexibility to EXIM trade which are crucial for the industry but also create jobs in the export sector. The launch of first bullet train on Mumbai-Ahmedabad route will help companies in the chemical industry from an operational standpoint as most of themanufacturing units are based along this corridor. The use of biodiesel at 5% is also a welcome move. The chemical industry will look to producing more biodiesel.

KPMG Jaijit BhattacharyaJaijit Bhattacharya, Partner, Infrastructure and Government Services, KPMG in India:

The Budget appears to be very well thought out and has something for all its stakeholders without being populist. It provides the much needed strategic financial headroom required for the railways to enable it to make the necessary critical investments into modernisation and expansion. The much needed support for PPP as a significant source of investment capital is the backbone for providing strategic financial headspace.

The focus on safety and security is much appreciated. The special focus on unmanned railway crossings is a positive move from an overall safety perspective. Increase in RPF constables is a much needed step to improve the security in trains. In addition, using modern technology to enhance safety and security, as well as improved management by deciding to adopt an ERP, is welcome.

We hope that there is also a focus on energy efficiency in order to bring down the operational costs, thus improving operational profitability. The focus on making railways more friendly for differently abled passengers is also a positive move.

The overall shift towards reforms in the railway’s board is a welcome step towards, what we hope is ‘corporatisation’ in Indian Railways. We believe this would give the railways the agility to modernise itself.

In addition to the above measures laid out in the rail budget, it would have been helpful if there was focus on non-traffic revenue generation to enhance profitability of the railways. Also, measures should be adopted to enhance domestic amenities for modernisation of railways.

KPMG SV SukumarPartner – Management Consulting, Head Strategy & Operations Practice, KPMG in India

Announcement of FDI in Railway sector and PPP for future projects will have a positive impact in terms of creation of new lines and capacity. This will help in achieving better road vs rail ratio for freight movement thereby reducing logistics cost for the industry especially for commodity players

The announcement to connect ports and speed up the existing delayed projects will debottleneck logistics and will help Railways keep in pace with logistics requirements of the industries.

Fruits and vegetable transport via AC storage, if implemented is surely going to transform the food supply chain in India and could have positive impact on availability, quality and costs. Though FDI in railway sector is positive, it will be better if this is on infrastructure area rather than non-core areas.

It is heartening to note that there is an aspiration to become the largest Railways, but this should be backed up a clear roadmap with time bound milestones.