Railway Budget 2014 amidst vote on Account and 72 new trains

Ahead of the general elections the United Progressive Alliance government kept the passenger and freight fares unchanged in the interim railway budget 2014-15. After presenting a vote-on-account the difficult task of fixing the state-run monopoly's damaged finances has been left to the next government.

Mallikarjun Kharge, who took charge of the railway ministry about eight months back, has announced 72 new trains. The railway minister has also promised to allow foreign direct investment (FDI) in his maiden budget that exhibited a worsening of railway finances.

This interim budget had direct effect on the shares of companies that manufacture equipment for the railways. Shares of the companies such as Kalindi Rail, Kernex Microsystems BSE -8.71 %, Texmaco Rail Engineering and Titagarh Wagons BSE -6.35 % fell by 1-4% after the budget speech because of lack of any core investment.

Unlike what is seen in an election year that the outgoing government presents an interim budget that allows the country to run until a new government comes to power. It is by convention that no major policy announcements are made in an interim budget. But Finance minister P Chidambaram is all set to present his vote on account to Parliament on February 17.

According to Kharge the Indian Railways just doesn't have enough infrastructure to do what it needs to do. Inadequate financial resources is a key constraint to railways following the desired path stated Kharge.

The Railway Minister highlighted the achievement of the railways under the second term of the UPA, buffing over the fact that passenger fares were only raised in January after a nine-year gap even though expenses were rising, which barely left the railways with any surplus for investment in capacity, expansion and passenger amenities.

 

As stated the operating ratio, a measure of expenses as a percentage of revenue, is seen deteriorating to 90.8% in 2013-14 in comparison with a budgeted 87.8% and 90.2% in 2012-13. Kharge has set a target to improve this to 89.8% in 2014-15.

"By a single stroke we cannot solve all the problems that have been infecting the Indian railway system over the decades," said minister of state for railways Adhir Ranjan Chowdhury, adding that it faced "heaps of problems".

The railways sought over Rs 30,223 crore from the general budget and proposed Rs 12,800 crore of market borrowing to fund the Rs 64,305-crore annual plan in 2014-15, which was up by just 8.3% over the revised Rs 59,359 crore in the last fiscal.

As per the sources Arunendra Kumar, chairman of the Railway Board said "This is a zero extra fare budget. We are seeking to generate revenue by getting more passengers and loading more"

The railways is planning to achieve this aim through improved ticket checking system and taking help of IT to improve sales. As accounts for freight, an empty flow discount and higher loads on all routes has been proposed. The discount will be applicable on wagons that go back empty.

As far as figures are concerned the railway budget has accounted an increase of 49.7 million tonnes in freight traffic target over the current year's revised target of about 1,052 million tonnes.

The railway budget expects a recovery in the economy to boost receipts 14.4% to Rs 1.60 lakh crore and contain the expenditure increase at 14% despite rising prices. There is a hope that a surplus of Rs 10,538 crore would be generated as compared with Rs 7,943 crore expected in the current fiscal.

The Railway Minister Mallikarjun Kharge also announced 17 new premium trains, 39 express trains and 10 passenger trains, extending the services to Katra, the base camp for the Vaishno Devi shrine in Jammu and Kashmir.

Kharge glossed Indian Railways' achievements under the UPA, but the yester budget showed that the railways- the country's lifeline was barely able to meet the ends that has led to compromising situation of investing in expansion, safety and convenience.