Logistics

Rail budget: Prabhu may not take the populist track

| Updated on: Feb 25, 2015
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Likely to focus more on raising funds for ongoing projects

Railway Minister Suresh Prabhu is unlikely to go in for any populism in the Railway Budget. Rather, he may present a detailed fundraising roadmap as he sets out to present his first budget, on Thursday.

Despite the drop in fuel prices, he may not opt for a cut in passenger fares or freight tariffs, as his Ministry needs resources to fund ongoing projects.

If he does not cut rates, the Railways should get ₹10,000-₹15,000 crore in savings, accounting for cheaper fuel. In the October-February period, diesel prices fell 21 per cent.

Diesel accounts for around 70 per cent of fuel expenditure, which makes up over 22 per cent of the total operational expenditure of the Railways.

Prabhu is expected to follow his predecessor in not announcing a slew of new projects, especially new trains or lines. Rather, he is expected to concentrate on completion of ongoing projects.

Last year, then Railway Minister D Sadananda Gowda had said that out of 674 projects, for which ₹1.58 lakh crore had been sanctioned in the last 30 years, only 317 could be completed. The rest will require around ₹1.82 lakh crore to be completed.

Wooing investors

With internal resources drying up, the Minister is likely to announce new measures to draw investment from private domestic firms and foreign investors. The rate of return detracts domestic investors from putting money into the Railways. Ideally, it should be 16-17 per cent, but with a greater focus on social projects, the return is normally below 10 per cent. Now, Prabhu could offer viability gap funding or share in the risk to attract private investment. The Budget could also see a focus on foreign direct investment, which would dovetail with Prime Minister Narendra Modi’s ‘Make in India’ mission.

The Centre has allowed 100 per cent FDI in some segments of the Railways.

These include construction, maintenance and operation of facilities to supply non-conventional sources of energy; mechanised laundry facilities; installation and maintenance of bio-toilets in passenger trains; setting up technical training institutes, testing facilities and laboratories; and providing technological solutions to improve safety.

Prabhu is also expected to promote the use of green technology, from bio toilets to solar power.

Safety and security will be another area that could see a lot of new initiatives.

Published on January 24, 2018

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