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This railway budget could mark the start of a turnaround in rail finances, compared to the last four years.
This is because of two reasons.
First, the revenue side is expected to see good growth supported by the recent freight rate hike. Second, the Railways has disposed of the arrears of Sixth Pay Commission, though it continues to reel under higher level of staff expenses.
The operating ratio number – an indicator that shows the expenditure per rupee earned – is expected to improve and touch 80s next fiscal. Since 2008-09, the operating ratio had breached the 90s mark, which meant that to earn every Rupee, railways was spending over 90 paise.
BRANDING EXERCISE
Moreover, the Railway Minister, Mr Dinesh Trivedi, is aware of the media spotlight that the Railway Budget exercise attracts. This is clear from his strategy of imposing a double digit across-the-board freight rate hike just a week before budget day.
“I am a professional. I have got an opportunity. I will do the best that I can,” Mr Trivedi told Business Line last week after the freight rate hike.
Mr Trivedi is likely to present a budget that talks of a strategy to “rehabilitate and reinforce” the foundation of Indian Railways network. Thus, the dwindling fund balances – such as depreciation reserve fund meant for investments in track renewals – are likely to improve.
He could focus more on his plans to increase railway revenues from non-traffic avenues such as commercial exploitation of land, public private partnership in non-core areas such as catering.
“The language of the budget speech is expected to be ‘different'…unlike the earlier speeches that had more official text,” claim official sources, adding that the Minister gave personal touches to the speech.
Moreover, though passenger fare and freight rate rejigs have increasingly been out-of-budget exercises in the last seven-eight years, this is an issue that seems to attract everybody's interest since Railways move some two crore passengers every day.
The thumb rule has been – announce reductions in Budget and hikes outside of Budget. Whether this budget has some announcements to this effect or not is a function of what the proposed steps are.
Will Mr Trivedi break the rule?
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