Rail Budget 2013-14: Srei Infra: Wider PPP scope key takeaway

Like previous budgets, this one aims to prepare the Indian Railways to be able to cater to the needs of a growing economy and emphasizes on aspects like safety, modernization, capacity augmentation, hygiene, service quality, etc. and is essentially a continuation of the previous years’ initiatives. However, this budget sets the stage for a wider scope for PPP in rail projects in the years to come. That is perhaps the biggest take away from this budget.

Out of the Rs. 5.19 lakh crore investment envisaged for railways in the Twelfth Plan (2012-17), Rs. 1 lakh crore is being aimed to be mobilized from PPP projects. These cover a wide array of activities namely Dedicated Freight Corridor (DFC) projects, redevelopment of railway stations, power generation and energy saving projects, freight terminal operations, setting up of wagon and locomotive units, building of staff quarters, hostel facilities, gauge conversion, network expansion, etc. The setting up of 25 skill development centres and one multi-disciplinary institution specializing on imparting technology-intensive skill sets are areas where private sector can chip in too. I am sure this budget would be followed by announcements on the policy front highlighting the incentives for private sector. So far, railways have found it difficult to attract private investments in the limited number of joint ventures undertaken in this sector.

While no passenger fare hike was announced in the Budget, the move towards adopting a limited fuel adjustment component in freight rate to be effective from 1st April is a step in the right direction. However, freight alone should not be made to bear the burden, there is a need for rationalization of passenger fares too. The concept of harnessing solar energy at level crossings is praiseworthy. The move to embrace technology towards improving railways services on various fronts from ticketing to station improvement to food quality control to improvement of warning systems is welcomed. Certainly these are areas where PPP can also be explored.

Keeping the Operating Ratio at 87.8% has been a commendable effort in a difficult year. The challenge would be in resource mobilization and implementation. I was looking forward to some announcements on addressing the problem areas that private players have been encountering on projects like Container Investment Scheme and Wagon Leasing Scheme, but there was nothing in the budget on that. I hope those would also get addressed in due course.