Rail Budget 2016: Expect to see capital outlay at Rs 1.25 lk cr, says Antique

Railway minister Suresh Prabhu, in his previous Budget, had said he envisages an investment of Rs 8.5 lakh crore over the next five years to achieve his stated goals
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Feb 23, 2016, 04.28 PM | Source: Moneycontrol.com

Rail Budget 2016: Expect to see capital outlay at Rs 1.25 lk cr, says Antique

Railway minister Suresh Prabhu, in his previous Budget, had said he envisages an investment of Rs 8.5 lakh crore over the next five years to achieve his stated goals

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Rail Budget 2016: Expect to see capital outlay at Rs 1.25 lk cr, says Antique

Railway minister Suresh Prabhu, in his previous Budget, had said he envisages an investment of Rs 8.5 lakh crore over the next five years to achieve his stated goals

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In his previous Budget, Railway Minister Suresh Prabhu had laid out a five year road map with an ambitious capital outlay for Indian railways. Brokerage house Antique expects the minister to continue on the same path despite the challenging environment and increase the overall capital outlay for FY17BE to Rs 1.25 lakh crore. The minister, in the previous Budget, had said he envisages an investment of Rs 8.5 lakh crore over the next five years to achieve his stated goals. Towards this, he was expecting support from Life Insurance Corporation of India (LIC) and the World Bank. The Railways has already signed an MoU with LIC for financial assistance of Rs 1.5 lakh crore over the next five years for construction of new lines and route electrification. It has already received Rs 2000 crore as the first tranche.

During FY16 BE, the budgeted capital outlay was Rs 1 lakh crore.

Antique believes the Rail Budget will focus on improving rail infrastructure to reduce congestion, safety, upgrading the current rolling stock, dedicated freight corridor and station development. "Allocation towards wagon procurement is expected to increase to 18,000-19,000 and the ordering for coaches/MEMU/EMU is also expected to improve as there were no orders awarded during FY16," the report states.

Meanwhile, Antique also says the current Budget will be a litmus test for the ministry given the challenging environment and to raise funding from bi-lateral/multi-lateral agencies. Prabhu, in the previous Budget, had shared an innovative way to involve financial institutions to raise extra budgetary resources. Hence, it would be interesting to watch how much of the budgeted capex the ministry was able to achieve and what is their target going forward, Antique says.

Some of the key project like the diesel and electric loco factories was cleared during FY16 and tendering for rail coach factory at Kanchrapara was also floated, the report says. There is no doubt that upgrading the current facilities and improving the rail infrastructure is the way forward for Indian railways.

Key thing to watch out for during the Rail Budget are (Excerpts):

1) How much of the budgeted capex of Rs 1 lakh crore for FY16e has the railways been able to spend and which areas the shortfall in capex happened.
2) What is the change in revised estimate for FY16 versus the Budget estimate?
3) How has the overall freight/passenger earnings been? Has the operating ratio improved?
4) For the medium to long term capital outlay amounting to Rs 8.5 lakh crore, has the rail ministry managed to get funding?
5) Any change in the overall capex plans, given the challenging environment?

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Rail Budget 2016: Expect to see capital outlay at Rs 1.25 lk cr, says Antique

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