Rail Budget 2012-13: Comments on Railway Budget FY2012-13

The Rail budget addresses all the concerns about the financial and functional well being of the railways. Railways have very seriously considered all the recommendations of the Safety and Modernization committees by announcing schemes suggested by them. Projects and schemes have been announced covering practically all of India keeping in mind the local demand. Passenger fares have been increased after a gap of 9 years which should contribute to the internal revenue generation. The Operating ratio for FY12 as revised estimates has gone up from proposed 91.91% to 95% which is detrimental to the health of the department.

The new budget is targeting Operating ratio of 84% which seems difficult to achieve considering current year performance. 30% increase in revenue generation is assumed on the basis of increased passenger travel and improved efficiencies due to various schemes and projects. This also seems unattainable as by the time the schemes and projects will be implemented the year will be gone without additional revenue generation.

Railways has clearly indicated that they are in difficult situation, they are trying to improve but would require Central govt support in terms of additional budgetary support( Rs 45,000 cr) and 10% of govt share of all investment made in infrastructure. Also, heavy dependence is portrayed on PPP which will take some time to happen as the PPP Policy is still in draft stage and past experience with Railway PPP hasn’t been good. As Highway and road sector PPPs are reaching saturation due to tough competition, developers are waiting eagerly for railways to open. If the Ministry can come out with a transparent and more open PPP policy, it may just become a hit.