Growth oriented budget for railways expected

New Delhi, July 7 :

The first railway budget of the Narendra Modi government to be presented Tuesday is expected to be growth oriented and unveil strategies to mobilise alternative sources of funding to modernise and upgrade the crucial logistics sector.

Railway Minister D.V. Sadananda Gowda is expected to propose steps to boost revenues as the Indian Railways is saddled with a huge cash cruch of Rs.26,000 crore amidst a decline in the growth in passenger earnings.

In the interim budget, Mallikarjun Kharge, the then railway minister, had set a revenue target of Rs.1.65 lakh crore that included Rs.1.06 lakh crore from goods tariffs and Rs.45,255 crore from passenger fares, and the balance from coaching and other sources.

Sectoral experts say the budget would bring in fiscal stability in the railways by sticking to the recent hike in fares and fund inflows for modernisation of infrastructure development through public private partnership (PPP) models.

“The railways need to monitise the significant value of tangible and non-tangible assets it has and raise funds through the PPP model. The budget also needs to develop the PPP route for the port to inland services of the railway,” said Jaijit Bhattacharya, partner, infrastructure and government, KPMG in India.

The new government has already increased railway passenger fares by 14.2 percent and the freight carriage charges by 6.5 percent. However, it will need more funds from international lenders to place in bucks to finance long gestation projects.

But there is high expectation that the minister will offer bold plans to improve the service that transports 23 million Indians every day.

The experts also say the railways should give out a “road plan” on how to connect with the manufacturing hubs, ports and the proposed “smart cities”.

The budget is likely to spell out the plan for having a “Diamond Quadrilateral” connecting the metros with high-speed trains as said by the prime minister.

The need for funding such projects may force the government to open the doors for private and foreign funds participation in the segment.

“Big ticket announcements such as high speed railway projects and station infrastructure improvements through private partnership is expected,” Vishwas Udgirkar, senior director, consultation firm Deloitte India, told IANS.

The development of railway infrastructure like cold-chain storage near railway lines is seen a key tool to fight inflation by reducing the supply-side bottle necks. This will also create more business opportunities for the the companies associated with the railways.

Many of such stocks made healthy gains Monday a day ahead of the budget. At the Bombay Stock Exchange (BSE), Container Corporation of India’s stocks gained 4.42 percent or 56.15 points at Rs.1,325.45 from its previous close of Rs.1,269.30.

Shares of wagon maker Texmaco Rail and Engineering grew 14.04 percent or 18.10 points to trade at Rs.147 around 3.00 p.m., rising from its previous close of Rs.128.90.

Scrips of Kalindee Rail Nirman (Engineers) increased 4.96 percent or 6.40 points at Rs.135.35, moving up from previous close of Rs.128.95.

Stocks of another wagon manufacturer, Titagarh Wagons, reported gain of 4.99 percent or 15.70 points at Rs.330.55 from its previous close of Rs.314.85. Hind Rectifiers shares too made healthy gains, they rose 4.92 percent or 2.80 points at Rs.59.75 from previous close of Rs.56.95.