Rail Budget 2007: Capex initiatives on the anvil

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Railway Minister Lalu Prasad Yadav tabled his Railway Budget in the Parliament today and a host of capital expansion seems to be on the anvil. In the next five years, the goverment intends to invest massively in container operations. 11,000 new wagons are needed while 700 additional bogies will be added in popular trains this year itself.

Wagon production is seen up 10% as new wagons will be replaced by outdated ones. The government intends to invest in improving infrastructure around railway stations. In this spate of of new initiatives from the government, a number of infrastructure companies will be beneficiaries.

CMD at Hind Rectifiers, SK Nevatia believes that this Budget will be promising for them as it will increase the requirement for equipments that they currently supply. He says, "The Railway Budget is very promising for Hind Rectifiers because this will increase the coach capacity, locomotive capacity and their expanding freights corridors all these means more locomotives, more AC trains. So this will increase the requirement for equipments we supply to the railways."

Amit Mondal, MD of Stone India expects a positive impact on the company's order book, thanks to the Rail Budget. He says that the Railway Minister's announcement on removal of old wagons and their replacement with new ones will definitely serve to further improve the order book. "We will see major growth in the new products in a few years' time as the railways are planning to grow both in coach and rolling stock area," he says. 

As far as investment is concerned, Sachin Bhanushali, President & CEO Gateway Rail Freight feels that everyone is very eager for developing terminals and all the 15 operators are eager to develop terminals in NCR and deeper hinterland where train operation is efficient as well as economic. He believes that this kind of encouragement from railway will go in a long way to improve the inline haulage of containers by rail.

According to Bhanushali, "The investments, which are being made by private sector, should also be complimented by increased inline capacity in these sections."

Lalu Yadav, in his speech addressed to the Lok Sabha, informs that there will be a complete overhaul in wagon designs. He says, "Railways procure wagons based on RDSO' s designs. We have decided to bring about a total change in this system. Now, wagon manufacturers will be permitted to supply wagons of their own designs, with RDSO recommended bogies, coupler, draft and brake gear. RDSO will certify and approve the new designs of wagons from the safety angle within 9 months. To encourage the development of such new technology wagons, a suitable freight discounts policy will be evolved so that benefits of the new technology are shared by the Railways and investors."

By Surya Surendran (With CNBC-TV18 inputs)