Investment in improving railway infrastructure and amenities including passenger safety and convenience, cleaner and modern coaches and toilets, steps on energy efficiency and enhanced role for private sector in improving the lot of railway stations are among the key announcements that citizens will eye when Finance Minister Arun Jaitley presents the 2017-18 Union Budget.
Steps on bringing back more passengers to its air-conditioned coaches -- a segment that railways is fast losing to airlines – would also be welcome.
This will be the first time in 92 years that there will be no separate Railway Budget but the provisions related to India’s largest transport services provider will form part of the main Union Budget.
The railways will continue to run as a commercial undertaking; a separate statement of Budget estimates and demand for grant will be created for it this time. The Union Budget expenditure will reflect the net expenditure of railways (i.e. rail expenditure less revenue receipts), which means that railways’ surplus will be recorded on the expenditure side.
After the merger, Railways would not have to pay dividend (up to Rs. 10,000 crores) to the government and its capital at charge would be wiped off. The Railways is looking at close to Rs. 1.35 lakh crores of financial outlay for FY18 with gross budgetary support expected to be Rs. 55,000 crores.
IDFC Securities expects some special package for safety on the back of sharp rise in train accidents. The special package will help the government procure technology and equipment for more rigorous inspections of safety on the rail network and reduce dependence on manual inspections by railways personnel.Ernst & Young expects a dedicated safety fund to be established.
“While capital expenditure would mostly be utilized for high speed rail corridor projects, line capacity addition, and electrification of tracks and lines, it is expected that government will increase the allocation of fund for improvement of the safety measures in view of recent train accidents,” E&Y said while revealing its Budget expectations for the railways. Commentary on the railways’ operating ratio – pegged at 92% for 2016-17 -- will be eyed. The operating ratio is the amount spent for earning every 1 rupee which means higher the ratio, the worse it is.
IDFC Securities expects the ratio to deteriorate in 2017-18, mainly on account of the higher employee cost burden as a result of implementation of the 7th Pay Commission.
“The progress in dedicated freight and industrial corridors has been slightly slow. As an additional area the government could come up with an investment plan to incentivize investment in metro network in the top 25 cities through central assistance. The government could integrate this with its Smart City plan, which would also help in the government’s plan to increase urbanization,” Morgan Stanley said in a note. “We are expecting the railway ministry to continue relying on a combination of cost savings through direct procurement of electricity and on non-fare revenues like monetisation of assets, advertisements and station redevelopment,” IDFC Securities said in its note.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
