Budget 2017 for railways: No populism, but no hike in passenger fare likely either | union-budget$railway-budget | Hindustan Times
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Budget 2017 for railways: No populism, but no hike in passenger fare likely either

From an “elaborate spread”, the railway budget proposals will be compressed into a “working lunch” of sorts this year and squeezed into less than 4 pages of the main budget speech that Union finance minister Arun Jaitley will read in Parliament on February 1.

union budget Updated: Jan 30, 2017 19:37 IST
Srinand Jha
The BJP-led government’s decision to scrap the railway budget is seen as a policy reform measure aimed at doing away with the “culture of populism” that has taken a heavy toll on the state-owned transporter’s financial health over the years.
The BJP-led government’s decision to scrap the railway budget is seen as a policy reform measure aimed at doing away with the “culture of populism” that has taken a heavy toll on the state-owned transporter’s financial health over the years.(HT File Photo)

From an “elaborate spread”, the railway budget proposals will be compressed into a “working lunch” of sorts this year and squeezed into less than 4 pages of the main budget speech that Union finance minister Arun Jaitley will read in Parliament on February 1.

The populist speeches by former railways ministers in the past 92 years, the political posturing on announcements of new trains, lines or factories, the brownie points over decisions to spare hikes in passenger fares will now be things of the past.

Jaitley, however, is likely to announce the creation of a Rs. 1 lakh crore funds corpus on infrastructure creation, including technology upgrades to ensure passenger safety, an ambitious scheme on steel imports to fast-forward track renewal plans, a speed upgrade plan for mail and express trains and the setting of timelines on executing the Mumbai-Ahmedabad bullet train project.

A “flexi-fare” scheme on passenger tickets is also likely, although the finance minister is expected to stay away from the tough decision of a direct hike in passenger and freight tariffs. Concrete proposals on the setting up of the Rail Development Regulator (RDA) are also likely.

The BJP-led government’s decision to scrap the railway budget is seen as a policy reform measure aimed at doing away with the “culture of populism” that has taken a heavy toll on the state-owned transporter’s financial health over the years.

The merger will also help the government formulate an integrated transportation plan for the country by harmonising needs and requirements to develop different modes such as ships, roads and airlines, officials say.

The cost of 380-off pending projects is worth a whopping Rs. 5 lakh crore. Losses in the passenger segment are estimated this year at over Rs. 30,000 crore. The transporter also needs to account for a payout of about Rs. 32,000 crore to implement the 7th Pay Commission recommendations.

In order to carry one passenger for one kilometre, the railways earn 28.52 paise but spend 57.76 paise. Conversely, it earns 123.27 paise to transport one tonne of freight for one kilometre but spends only 72.28 paise. Profits earned from freight have been diverted to subsidise passenger travel.

“This budget is expected to address the freight versus fare distortions of the Railways,” sources said.

With declining freight and passenger revenues – the transporter’s operating ratio (paisa spent against a rupee earned) is likely to hover in the region of 90%. This means that against every rupee earned, the railways are spending 90 paise.

With the rail budget having been scrapped, the railways will no longer need to fret over finding resources to pay a dividend to the Centre against the gross budgetary support component of the budget.

If adequate resources are not available for capital expenditure, the responsibility for this will no longer be of the railway ministry alone.