IMF Budgeting Guidelines
Transforming Indian Railways over next Five Years
Government of India
Ministry of Railways
Railway Minister Outlines Four Goals for Transforming Indian Railways over next Five Years
The Minister of Railways Shri Suresh Prabhakar Prabhu has outlined four goals for Indian Railways to transform it over the next five years. These goals are:
a) To deliver a sustained and measurable improvement in customer experience, the Indian Railways is launching initiatives that will systematically address customer concerns about cleanliness, comfort, accessibility, service quality and speed of trains.
b) To make Rail a safer means of travel.
c) To expand Bhartiya Rail’s capacity substantially and to modernise infrastructure. Given the importance of rail travel for the citizens, Indian Railways will increase daily passenger carrying capacity from 21million to 30 million. It will also increase track length by 20% from 1,14,000 km to 1,38,000 km, and will grow its annual freight carrying capacity from 1 billion to 1.5 billion tonnes. And
d) To make Bhartiya Rail financially self-sustainable, the Indian Railways will generate large surpluses from its operations not only to service the debt needed to fund capacity expansion, but also to invest on an on-going basis to replace its depreciating assets. This will require material improvement in operating efficiency, tighter control over costs, greater discipline over project selection and execution, and a significant boost to Railways’ revenue generating capacity.
Presenting the Railway Budget 2015-16 in Parliament today the Minister said, these goals will also ensure that Railways is an integral part of all the flagship programmes that our Prime Minister has launched for improving the quality of life of the downtrodden, from ‘Swachh Bharat’ to Make in India, and from ‘Digital India’ to ‘Skill India’.
Funding Requirement Announced - Feasible to Finance It.
The investment target is mentioned as Rs. 8,50,000 crores in the next five years. In dollar terms it is $137 billion dollars which is equal to 27.4 billion dollars per year.
While many yesterday said, that this amount of money cannot be raised, I do not see any difficulty in raising this amount of finance. It is very much feasible and government can go ahead and execute its plan for Railways.
You may as a reader ask how is it possible.
Remember we are a 2 trillion dollar economy. We have to the aspiration to become 20 trillion dollar economy.
Railways presently contributes 1% to our GDP. Plan is to increase it to 3%. Does the arithmetic fit? It not write a comment on your objection.
Size of Plan Budget of Railways up by 52%
Railways to Set up Financial Cell to Seek Advice from Experts
The Union Railway Minister Shri Suresh Prabhakar Prabhu has announced that the size of the Plan Budget has gone up by 52% from Rs. 65,798 crore in 2014- 15 to Rs. 1,00,011 crore in 2015-16. Support from the Central Government constitutes 41.6% of the total Plan Budget and Internal generation 17.8 %. Introducing the Railway Budget for 2015-16 in Parliament today he said that in view of the fact that it would be a challenging task to initiate the mobilization of extra-budgetary resources, it is proposed to set up a Financing Cell in the Railway Board, which would seek the benefit of advice from experts in this field.
The Railways Minister informed the members that for financing remunerative projects through market borrowings, it is intended to tap low cost long term funds from insurance and pension funds, multi-lateral and bilateral agencies which can be serviced through incremental revenues. Railways will create new vehicles to crowd in investment from long-term institutional investors and other partners. These may include setting up an infrastructure fund, a holding company and a Joint Venture with an existing NBFC of a PSU with IRFC, for raising long term debt from domestic as well as overseas sources, including multilateral and bilateral financial institutions that have expressed keen interest in working closely with Railways in this endeavor. Railways will monetize its assets rather than sell them, he added.
Financial Performance of Railways during 2014-15
Railway Minister Shri Suresh Prabhkar Prabhu has said that the passenger earnings which were budgeted to increase by 22.2% have been scaled down to 17.7% keeping in view the persistent negative growth trend, particularly in non suburban non-PRS segment of travel. Presenting the Railway Budget 2015-16 in Parliament today, he said there is a net reduction in Gross Traffic Receipts by Rs 917 crore in RE compared to the BE of Rs 1,60,165 crore.
The Railway Minister said Ordinary Working Expenses (OWE) in BE were provided for at an increase of 15.5% over 2013-14 which has been scaled down to 11.7% in the RE. Taking into account the likely savings accruing from drop in prices of HSD (High Speed Diesel) for traction partly offset by higher requirements under certain heads for maintenance, safety and cleanliness activities, the budgeted OWE of Rs 1,12,649 crore have been decreased in the RE 2014-15 to Rs. 1,08,970 crore i.e. by Rs 3,679 crore.
He said BE provided for an appropriation of Rs 28,865 crore to Pension Fund. However, based on trend, the pension outgo has been assessed to be higher than the provision made in BE. Accordingly, appropriation to the Pension Fund has been increased to Rs. 29,540 crore in RE. Internal resource generation also improved and accordingly the appropriation to DRF has been scaled up to Rs 7,975 crore in RE from the BE 2014-15 provision of Rs 7,050 crore.
Shri Prabhu said after taking into account the above, "Excess" of receipts over expenditure stands at Rs 7,278 crore in RE 2014-15. With the above estimates, the targeted Operating Ratio is 91.8% against 92.5% in BE, which is an improvement of 0.7% percentage point over BE and 1.8% over 2013-14. Plan size for 2014-15 has increased from Rs 65,445 crore in the B.E to Rs 65,798 crore in the Revised Estimates i.e. by Rs 353 crore with higher provisions under internal resource component and market borrowings for rolling stock requirement.
Speed of Nine Railway Corridors to be Increased
The speed of nine railway corridors will be increased from the existing 110 and 130 kmph to 160 and 200 kmph respectively so that inter-metro journeys like Delhi-Kolkata and Delhi-Mumbai can be completed overnight. Announcing this while presenting the Railway Budget 2015-16 in Parliament today the Railway Minister Shri Suresh Prabhkar Prabhu said this will involve the upgradation of track including turnouts and rolling stock to higher standards as well as the adoption of improved methods of track recording, monitoring and maintenance.
He said the average speed of freight trains, both in empty and loaded conditions, will also be enhanced. A policy of attaining speeds of 100 kmph for empty freight trains and 75 kmph for loaded trains is being put in place. The Minister said that with the objective of maximizing loading in every train, the loading density on all major freight bearing routes of Indian Railways will be upgraded to 22.82 tonne axle loads.