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Rail budget 2015: Cut in passenger fares unlikely, govt to focus on revenue channels

india Updated: Feb 25, 2015 22:30 IST
Railway Budget


Railway minister Suresh Prabhu is unlikely to slash passenger fares but may announce proposals to push the government’s Make in India and Swachh Bharat campaigns when he unveils the rail budget on Thursday, sources said.

The rail budget could show how far the Modi government is prepared to drive investment in the country’s top employer that is reeling from a cash crunch and needs Rs 1,82,000 crore to complete over 350 stalled projects.

Considered a reformer, Prabhu may lay the road map for attracting private investment in the railways and is likely to go slow in announcing new trains and projects. Funds allocation will be made only for strategically crucial projects, sources said.

Minister of state for railway Manoj Sinha said falling diesel prices wouldn’t translate into lower passenger fares and Prabhu is expected to walk the tightrope to bridge the huge gap in the railways finances.

"The fall in diesel prices and a pick-up in freight earnings have given us a golden chance to raise investments," said a government official.

Officials said Prabhu has factored in savings from cheaper diesel totalling between Rs 12,000-15,000 crore but may also ask the finance ministry for an extra Rs 20,000 crore for track and rolling stock upgrades in a network used by some 25 million passenger daily.

Reform in the Railways that provides jobs to around 1.3 million people has always been politically sensitive. Successive governments have backed away from modernisation, preferring instead to use the system to provide cheap transport and jobs. Years of under-investment, however, has taken its toll on the world’s fourth largest rail network with slow services and frequent accidents.

A challenge for the railway minister would be to decrease the cross-subsidy for passenger service from freight earnings, which is touching Rs 24,000 crore. Last year, Rs 45,450 crore was budgeted for the Railways- with the government providing 66% and the rest coming from internal resources.

In line with the 'Swachh Bharat' campaign, a slew of measures such as provision for dustbins in all coaches besides proposal to cover 100 more trains under 'On Board Housekeeping Services' are likely.

The budget could also announce the much-awaited plan to procure 20 train sets for operating on the Rajdhani and Shatabdi routes to reduce travel time.

Make in India is also set to make its presence felt with plans for manufacturing coaches to run at a 200-km per hour speed. Indigenous manufacturing of locomotive components will also be proposed.

Redevelopment of about 100 stations, leveraging empty spaces for construction of marketing complex and other commercial projects are also on the cards.

Prabhu could also announce the way forward for the ambitious high-speed train project between Mumbai and Ahmedabad, and survey programmes for the proposed diamond quadrilateral route.

The railway minister is also expected to focus on tapping more revenue channels and could announce innovative ways for raising resources through non-tariff methods such as increasing revenue from advertisements and leveraging surplus land among others.