Swachh rail, logistics arm among many firsts in Prabhu's budget
When rail minister Suresh Prabhu announced Rs 8.5 lakh crore in investment over the next five years in his first full-term budget, he offered passengers perks such as stable fares, better toilets and cleaner stations — but no new trains on the world’s fourth largest rail network, a first.business Updated: Feb 27, 2015 00:45 IST
When rail minister Suresh Prabhu announced Rs 8.5 lakh crore in investment over the next five years in his first full-term budget, he offered passengers perks such as stable fares, better toilets and cleaner stations — but no new trains on the world’s fourth largest rail network, a first.
Prabhu has delivered, by a wide reckoning, India’s first reform-oriented rail budget in decades. For the first time, the railway board will have, within it, a financial cell. That’s a step towards installing corporate-style book-keeping. In other words, the rail network looks veering towards a much-needed profit-and-loss approach.
Two, the railways was fast losing its most lucrative business of hauling oil. Frustrated by a congested network, oil firms gradually were finding it comparatively cheaper to transport fuel by laying costly pipelines. Prabhu announced setting up of a transport logistic arm and connectivity with ports to snatch the business back. Steering clear of populism is in itself a landmark.
Successive governments have tended to prioritise populist objectives like keeping fares low and adding new trains to please voters, rather than increase investment to make the ramshackle 64,000-km British-era network fitter.
Prabhu has set in motion a process to wean the railways off from over-depending on the government for funds. According to his plan, 59.4% of budgetary support will come from the Centre and internal resources, down from 66% earlier. To make up, Prabhu will dip into financial institutions and the markets.
The blueprint includes setting up of an infrastructure fund, a holding company and a joint venture, raising long term debt from domestic as well as overseas sources, including multilateral and bilateral financial institutions.
The catchline, as Prabhu spelt out: “Monetisation of assets rather than selling them.”
In all, Prabhu’s budget looks more like a corporate turnaround blueprint, rather than a statement of account and expenditure.