Jul 09, 2014, 10.30 AM | Source: CNBC-TV18
Sadananda Gowda, Railway Minister in the National Democratic Alliance (NDA) government, presented the Rail Budget in Parliament today. Catch live updates here.
1:45 pm: "The minister's focus on boosting the country's freight network, especially the decision to set up a dedicated freight corridor, was good," says a spokesperson for the CII.
1:40 pm: The opposition is down to what it does best. The Rail Budget does not offer "anything unique" and there are no concrete plans in it, says the Congress' Ashwani Kumar on CNN IBN.
1:32 pm: "The Budget lays out our vision and will strengthen instutional mechanisms and transparency. Railways is the growth engine of the country and we will focus on its development," the prime minister says.
1:28 pm: Prime Minister Narendra Modi is now addressing the nation via a television link.
1:25 pm: "The Budget's intention is to improve railways and its operations," says the Confederation of Indian Industry. "The thrust on coal connectivity, freight cargo is good. We have to see how funding of critical projects will be maintained. The diamond corridor, high-speed rails are welcome."
1:18 pm: A quick check on the markets. Texmaco Rail is down a whopping 12 percent. Several stocks such as Titagarh Wagons, Kalindee Rail and Kernex Micro are locked in a lower circuit limit. The broader market has recovered somewhat from the day's low to trade about 0.3 percent lower.
1:15 pm: "Given the lack of transparency with respect to how accounts are maintained in the railways, how will private investment come in?" asks an expert on CNBC-TV18.
1:10 pm: So, here it is. Overall, a Budget that on the face of it looks more evolutionary than revolutionary, which perhaps explains the market's insipid reaction. Some broad open-ended announcements, such as with respect to launching bullet trains, without much details but several key positive announcements such as those on FDI and PPP and the minister's thrust on improving efficiency (restructuring the railway board, outsourcing cleaning services, etc).
The deterioration of the operating ratio (money the railways spend to earn every Rs 100) from about 90 percent to 94 percent shows a stark deterioration in efficiency. Most of the FY15 numbers such as receipts and expenditure numbers are in line.
1:05 pm: After going through the list of new railway lines (which we will update shortly, as soon as we lay our hands on the Budget speech), THE SPEECH COMES TO AN END.
1.01 pm: The minister has now moved on to announcing new trains to be introduced this fiscal. Some chatter in the house.
1.00 pm: Region-specific updates.
- Running 29 projects at a cost of Rs 20,680 crore in Telangana, AP.
- Earmarked Rs 5,116 crore for projects in northeast this fiscal.
- To ensure connectivity in three critical coal evacuation lines, including Jharsuguda in Odisha.
12:58 pm: Here are steps the minister will take to boost efficiency in the railways sector:
- Propose to restructure 'unwieldy' Railway Board.
- Aim to use station rooftops to harness solar energy.
- e-Procurement to be made compulsory.
- Status of ongoing projects to be available online.
- Propose to set up project formulation and management group.
12.53 pm: The stock market is now at the day's low. Down about 0.6 percent for both Sensex and Nifty. Profit-booking?
12:50 pm: "We will facilitate connectivity to new ports via PPP. We will talk to the industry to attract investment under PPP, BOT modes."
12:48 pm: Other announcements aimed at improving Railway servces:
- Will offer wifi-services in all 'A' category trains and A1 stations.
- To have digital reservation charts at stations.
- Working on making railway offices paperless in five years.
- e-Ticketing through mobile phones will be popularized.
12.45 pm: The minister has allocated Rs 100 crore for high-speed railway network. "We will create the Diamond Quadrilateral network (connecting five cities) for high-speed trains. We will also look to increase speed of some trains to 160-200 kph"
12.41 pm: "We will launch first bullet train on Mumbai-Ahmedabad route."
12.38 pm: "We are contemplating setting up a railway university. Staff will asked to take various short-term technical courses at institutes," says Gowda.
12.34 pm: Here are key announcements aimed at improving railway services:
- "Will provide lifts, escalators via PPP route at all major stations."
- "Propose to introduce food courts at major stations".
- "Will encourage corporate houses to adopt stations and maintain them".
- "Will outsource cleaning services in railways".
- "CCTVs will be installed at major stations to monitor cleanliness"
- "Will expand scope of online booking".
- "To recruit 4,000 Women RPF constables".
- "Reservation system will be revamped".
- To introduce pre-cooked ready-to-eat meals by reputed brands.
12.28 pm: Railway stocks, however, are unimpressed. Many key stocks trading sharply lower. The broader market is also slowly inching lower.
12.24 pm: "I propose to hike Budgetary plan outlay to Rs 47,650 crore, compared to Rs 30,200 crore outlined in the interim budget." This should spur investments in a big way, if execution does not come in the way.
12.20 pm: On FY15 targets, Railways are targetting receipts of Rs 1.64 lakh crore (versus Rs 1.39 lakh crore in FY14) and expenditure of Rs 1.49 lakh crore.
12:17 pm: Here comes the big announcement: "I seek Cabinet approval for foreign direct investment in Railways except in railway operations. The government will also look to fund future projects, including high-speed trains, via the public-private-partnership mode. We also need to leverage railway PSU resources. We will also look for ways to monetize railways land."
12:15 pm: "The recent fare revision will bring in only Rs 8,000 crore".
12:13 pm: "The government will need Rs 50,000 crore for each of the next 10 years".
12:12 pm: The previous government's policy to not raise passenger fares has resulted in the passenger segment not being viablem, says Gowda.
12:10 pm: The minister provides FY14 numbers.
Total gross receipts stood at Rs 1.39 lakh crore, lower than Rs 1.44 lakh crore stated in the interim budget. FY14 operating ratio stood at 94 percent, sharply higher than the 90.8 percent stated in the interim budget.
That's some sharp revisions.
12:07 pm: While we carry 23 million passengers every day, there are still people who have not set foot on Railways. While we carry 1 billion million tonne of freight, there are still vast tracts of places in the hinterland that are still waiting for the railway network to arrive. That is the challenge we face."
12:05 pm: "The number of passengers we carry is larger than the population of Australia."
12:03 pm: "When I was exposed to the intricacies of the working of the Railways, I realise the enormity of the challenge that lies in front of me".
12:00 pm: RAILWAY MINISTER SADANANDA GOWDA HAS STARTED THE BUDGET SPEECH AMID MINOR CHATTER.
11:58 am: An update on the market: heading into the Budget, railway stocks are trading mixed with sharp movements on either side. Is a correction on the cards after the heady run-up of the past few weeks?
11:55 am: Railways, which carried about 90 percent of the country's freight in 1951 today move less than 30 percent, despite being a lower-cost proposition than roads. Here's how India may benefit if the Railways focused on upping the freight figure .
11:50 am: One of the most radical suggestions to improve the state of railways is to scrap the ministry and run it through a professionally managed board. Experts point towards China which dissolved its railways ministry in 2013 at boost efficiency and end corruption in the system. Can the government really push through such a bold reform or is that wishful thinking ?
11:45 am: The Rail Budget speech will start in about 15 minutes. Yesterday, members of Parliament disrupted proceedings in the house over the price-rise issue. Hope the budget speech will be allowed to be read without disruption.
On that topic, remember how erstwhile minister Mallikarjun Kharge's Rail Budget speech was washed out by MPs raising a din over the Telangana issue in February?
11:30 am: Here are, in sum, key expectations from the Rail Budget.
- The government should raise foreign direct investment in Railways and also provide a private sector role in railways (Modi had hinted at this recently when he talked about upgrading railway stations).
- Provide at least 20 percent concession on railway freight charges on account of export of iron and steel to promote exports.
- Announcements to upgrade investment in railways, with the aim of developing high speed trains and corridors.
- Higher budgetary allocation to the Railways to expand the present network and improve safety (gross budgetary support of Rs 30,200 crore in FY15 interim budget)
- New major rail lines for Eastern India -- construction of these lines should help transport more than 100 million tonne of coal annually -- helping meet domestic demand, curb imports, and in general boost the entire supply chain of power production/distribution in the country.
11:25 am: Facing its first challenge, the Narendra Modi government will present its first Railway Budget on Tuesday. High-speed trains, world-class stations and safe journeys are likely to be the government's top priorities, says this IBNLive article .
11:20 am: "By a conservative estimate, the railways need Rs 20,00,000 lakh crore of investment by 2020, according to economist Tirthankar Patnaik at Religare Capital Markets said. That's far in excess of the Rs 1,44,000 lakh crore the sector is estimated to earn this year even after an unpopular fare-hike pushed through last month." Read this interesting article on the challenges faced by the Modi government to turn around the Railways sector.
Meanwhile, industry body ASSOCHAM has called for the government to increase its funding support to the Railways from about Rs 30,000 crore to Rs 40,000 crore.
11:15 am: For FY15, the interim budget had forecast total receipts at Rs 1,65,000 crore and expenditure of Rs 1,45,300 crore, with net revenues of Rs 19,700 crore. Operating ratio is slated to fall to 89.80 percent.
11:10 am: Here are Railway's financial numbers from last year.
In FY14, total receipts stood at Rs 1,44,200 crore. Less expenditure of Rs 1,28,400 crore and you had net revenues of Rs 15,800 crore. Operating ratio (the percentage is the money the railways have to spend to earn Rs 100, lower the better) stood at 90.8 percent.
11:05 am: Here is a macro view at the operations of the Indian Railways. Every budget, the government allocates a plan outlay for the Railways (stood at Rs 59,359 crore for FY2014 and pegged 8.3 percent higher at Rs 64,305 crore for FY15 during the interim budget in February). Of this, a part (Rs 30,223 crore for FY15) will be financed through the gross budgetary support announced in the Budget. Will the Railways Minister tweak the FY15 numbers in the full Rail budget?
11:00 am: An hour to go before the big event starts.
10:55 am: To watch the Rail Budget speech live on CNBC-TV18, click here .
10:50 am: By hiking railway fares, the government chose to addresse a key issue outside the Budget. What remains to be seen is how much the additional revenues go into spurring investments into railways, says Anish Damania of IDFC Securities. Read more .
10:45 am: In other news, in keeping with this government's tech-savvy, the Railways will, after the Budget, launch a social-media app, and create accounts on Facebook and YouTube. And if you're away from a television set, dial 022-4501555 to hear the budget speech live. Read more .
10:40 am: Speaking of stocks, here is a ready-reckonor on stocks that you need to keep in mind with respect to the Rail Budget.
Any announcements on the railways introducing more container trains (perhaps on the eastern corridor) will benefit Container Corporation of India (CONCOR) , which holds a majority share in this business;
10.35 am: Interestingly, many railway stocks -- which have enjoyed a healthy run-up recently -- are suddenly seeing a down-move. Stocks like Titagarh Wagons , Kernex Micro and Texmaco are down around 5 percent intraday. What has the market sensed?
10:30 am: Welcome to the live coverage of the Railway Budget. Here you will get real-time news updates on announcements from minister DV Sadananda Gowda, immediate reactions and on-the-fly analyses on the event. The Budget starts at 12 noon.