Railway Budget 2009-10: No major surprises - Views on News from Equitymaster

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Railway Budget 2009-10: No major surprises

Jul 3, 2009

The Railway Minister Ms. Mamta Banerjee presented the railway budget today. The budget has left passenger fare and freight rates unchanged. It talks about world class facilities and modernization of few of the railway stations besides safety and security. It remains to be seen whether this gets converted into reality! Budget Announcements

On the industry front:

  • The freight volume target has been fixed at a more realistic 880 m tonnes. Railways is also seeking increase share in new traffic streams like automobiles, fly ash, etc.
  • New policy to be launched for construction and operation of private freight terminals.
  • Railways to develop cold storages for farmers to store vegetables and fruits.
  • Railways to set up Land Banks to be used for industry.
  • The dedicated freight corridor sees extension of Eastern corridor to Dankuni. The logistics parks and mega power plants on the Delhi Mumbai Industrial corridor will be executed in public private partnership mode.
  • To run superfast parcel express trains on select routes to provide premium parcel services with assured transit times.

On the passenger front:

  • The passenger fare remains unchanged.
  • A 119% increase in fund allocation for passenger amenities (spend increased to Rs 11 bn from Rs 5 bn).
  • Develop 50 stations as world class stations. Also develop 375 adarsh stations during FY10 with basic facilities like drinking water, adequate toilets, catering services, waiting rooms etc.
  • Plans to construct Multi-Functional Complexes (MFCs) in station premises planned to provide travelers facilities like shopping, food stalls and restaurants.
  • To ensure safety and security of passengers, few services like Infotainment services to be provided in major long-distance trains, at least a doctor on long distance trains and the number of women commandoes and women RPF squads will also be enhanced.
  • Apart from expansion of e-ticket services, automatic vending system would be installed at 200 large and medium sized locations. Efforts will also be directed to provide reserved tickets at 5,000 post offices.
  • To accommodate greater number of travelers due to an increase in population, railways plans to develop double decker coaches for intercity travel.
  • The young India who voted for the UPA government is also taken care of. For the youth, Yuva air-conditioned (AC) trains to be introduced whereby one would have to pay Rs 299 for distances upto 1,500 km and Rs 399 for distances upto 2,500 km.
  • The period of advance booking under the Tatkal Scheme will be reduced from 5 days to 2. Further, Tatkal tickets will be made available destination-wise.

Other initiatives:

  • Plans to augment capacity through adequate allocation for new lines (250 kms), gauge conversion (1,300 kms), doubling, (700 kms) and electricifcation (1,000 kms).
  • Photo-ID cards-cum-credit cards to be given to accredited journalists. Travel concession has been increased from 30% to 50% for them.
  • To continue focus on critical needs for modernization of the rolling stock through induction of high end technology for new design higher capacity wagons, higher horse power locomotives, stainless steel coaches and wagons etc.
  • 18,000 wagons to be acquired during the current year.

The impact...

  • Tatkal tickets would be made available destination wise instead of from end to end. This will reduce the financial burden on passengers.
  • The freight volume growth target may be taken care of by the manufacturing sector itself. With increase in petrol and diesel prices, road transportation would be all the more expensive. With that a shift in favour of railways is likely to be seen as compared to roadways transportation by railways over long distances is economically viable. The bulk of the cargo carried by railways comprises of commodities iron ore, steel, cement, coal, etc. The benefit of stable freight rates would be felt more by manufacturers and traders of these commodities.
  • Wagon manufacturing companies such as Titagarh Wagons may see surge in orders as railways plans to acquire 18,000 wagons during the year.
  • With railways targeting new transport streams like automobiles, fly ash etc, container train operators like Container Corporation and Gateway Distriparks may stand to benefit from increased traffic
  • Increased automation could provide a boost to IT service providers who specialize in this domain

The railway minister has outlined massive plans to provide better services and world class facilities to users. But execution is the key. Therefore, whether this budget will benefit the masses remains to be seen!

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