Tuesday, February 26, 2013

Railway Budget 2013-14: Passengers Fare Untouched, Hike in Freight Tariff

Railway Minister Pawan Kumar Bansal presented the Railway Budget for 2013-14 in the Parliament on February 26. The Budget spared passengers a fare hike, but raised various charges on tickets as well as freight tariff to net in additional Rs 4,683 crore a year.

Plan Outlay

The railway minister announced the highest-ever plan outlay of Rs 63,363 crore for the public sector behemoth. Of this, Rs 14,260 crore would be raised from internal resources with Rs 26,000 crore budgetary support. Other sources of financing include Rs.14,260 crore from railway's internal resources and Rs.2,000 crore from railway's share in road safety fund. There is also a plan to raise Rs.15,103 crore from the market and mobilize Rs.6,000 crore through Public-Private-Partnership (PPP) route to fund its expansion plans in 2013-14.

While tatkal charges for sleeper class have been raised by Rs 15 to Rs 25 and for AC chair car from Rs 25 to Rs 50, tatkal charges in AC-3 tier have been increased by Rs 50 and AC-2 tier and executive class by Rs 100. The reservation fee for AC First and Executive classes has been raised to Rs 60 from Rs 35 and that of First Class and AC-2 doubled to Rs 50. Reservation fee for AC chair car, AC-3 economy and AC-3 tier has been increased to Rs 40 from Rs 25 and supplementary charges for superfast trains raised between Rs 5 and Rs 25.

Growth Rate

It is creditable that an operating ratio of 88.8 per cent is being achieved during the current year 2012-13, even after fully repaying the loan of Rs 3,000 crore along with interest that was taken from the Ministry of Finance, and after setting aside Rs. 9500 crore for Depreciation Reserve Fund (DRF). Against this, the budget estimate for 2013-14 projects an Operating Ratio (OR) of 87.8 per cent with a DRF appropriation of only Rs.7500 crore. This once again highlights the need for a more reliable index of financial performance rather than the present OR, which can be tweaked to suit by appropriately adjusting the DRF allocation. It is hoped that the proposed revamping of the accounting system will look into this aspect.

The Gross Budgetary Support (GBS) component out of this was projected as Rs. 2.5 lakh crore. It is rather distressing to note that the 12th Five-Year Plan approved by the Planning Commission has scaled down the Railway plan to Rs. 5.19 lakh crore with a GBS component of Rs. 1.94 lakh crore.

In other words, the government is not in a position to provide for a much higher rate of growth of the railway sector than it has historically done. The long-term implication of this modest growth rate on the economy as a whole needs to be looked into.


* No increase in passenger fares

* Rs.6,600 crore increase in earnings from fare adjustment in January

* Rs.63,000 crore investment in 2013-14

* 1,047 million tons freight loading estimated during 2013-14

* Passenger earnings of Rs 42,000 crore estimated in 2013-14

* Indian Railways Institute of Financial Management to be set up at Secunderabad

* Chair at Delhi to promote research in reducing carbon footprint

* 22 new lines to be taken up in 2013-14

* Superfast and Tatkal charges to rise

* 67 new Express trains to be introduced

* 27 new passenger trains; run of 58 trains to be extended

* New debt service fund to be set up

* Six more Rail Neer bottling plants to be set up

* Losses mounted from Rs.22,500 crore in 2011-12 to Rs.24,600 crore in 2012-13

* Planning Commission pegged 12th Five-Year Plan at Rs.125.19 lakh crore

* Fall in accidents - per million accidents down from .41 to .13

* Aim to eliminate 31,846 level crossings

* Will close fiscal 2012-13 with fund balance against previous deficit; need to build fund balance to Rs.30,000 crore by end of 12th Five-Year Plan

* Operating ratio of 88.8 percent achieved

* Dividend reduced from 5 to 4 percent

* Electrification of 1,200 km to be completed this year

* 72 additional suburban services in Mumbai and 18 in Kolkata

* Complementary passes of freedom fighters to be renewed every three years instead of annually

* New wheel factory to be set up at Rae Bareli

* Greenfield EMU manufacturing facility at Bhilwara

* Railway energy management company to be set up to harness solar and wind energy

* 1,000 crossings to be energized by solar power

* 1.51 lakh vacancies to be filled up

* Locomotive cabs to be air-conditioned

* Azadi Express to be introduced to travel to places associated with freedom struggle

* India in 1 billion ton freight club

* By end of 2013-14, 1,500 km of contracts to be awarded for two dedicated rail corridors

* Rs.1 lakh crore target set for public-private-partnership route

* Free Wi-Fi to be provided on some trains

* Rs.100 crore for improving stations in New Delhi

* 179 escalators and 400 lifts at A 1 and other select stations

* E-ticketing through mobile phones

* SMS alerts for passengers on reservation status

* Next generation e-ticketing system by end of 2013


The 2013-14 Budget has skirted the prickly issue of structural reforms. There is no mention in the budget of even the proposal in the last budget to expand the Board to include two members to look after PPP /Marketing and safety/research. The proposal has perhaps been shelved.

Overall, the budget conveys an impression of an exercise to keep the system going very much as it has done in the past, at a modest growth rate. Whether such a rate of growth of this key infrastructure sector will be sufficient to sustain the projected growth rates of the economy as a whole remains to be seen.
Nevertheless, it is a matter of pride that the Indian Railways has joined the select club of world railways moving more than a billion tons of freight annually, and is entering into yet another exclusive group of railways moving more than 10,000 tons per train. Some concomitant steps that should improve maintainability, reduce maintenance costs and improve staff productivity such as widespread introduction of track friendly/self-steering bogies and doing away with the anachronistic institution of goods guards, have not been explicitly mentioned in the budget. Hopefully, these and other steps will be implemented.

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