Budget Seeks Bigger Role for Private Players in Rail Infrastructure Development

Aiming at boosting the sluggish economy, Finance Minister Nirmala Sitharaman on July 5 emphasised on the role of private players for faster development of rail infrastructure including rolling stock production and delivery of passenger freight services in her maiden budget. As expected there was no announcement of new trains nor mention of fare hike in the budget.

Continuing with the accident-prevention mission, safety got top billing with an additional Rs 1250 crore for elimination of level crossings across the country in a phased manner and Rs 268 crore from Nirbhaya Fund for installation of CCTV at rail premises.

Recognising the need for decongesting the main trunk routes, Sitharaman highlighted the completion of the much-delayed Dedicated Freight Corridor (DFC) project. Besides DFC, Sitharaman said that inland waterways will be extensively developed so that the Indian Railways network can also be decongested.

For the financial year 2019-20, capital expenditure for Indian Railways has been pegged at Rs 1,60,176 crore. The total revenue expenditure has been kept at Rs 2,07,900 crore. Operating Ratio target for the 2019-20 is 95% against 97.3% in 2018-19.

According to the Finance Minister, the infrastructure of Indian Railways would need an investment of Rs 50 lakh crore between 2018-2030. Highlighting the need for investments on a large-scale in Indian Railways, she acknowledged that the government cannot increase the outlays and substantially encouraged the private sector to participate in railway infrastructure redevelopment in the Public Private Partnership model.

"Railway infrastructure would need an investment of Rs 50 lakh crore between 2018 and 2030; PPP to be used to unleash faster development and delivery of passenger freight services," she said, adding that Railways will be encouraged to use Special Purpose Vehicles for suburban projects.

Also read: Rail Budget: Comprehensive Reforms Are Need of the Hour

In her over two-hour-long Budget speech, Sitharaman did not announce a large-scale stimulus plan, but made clear that there would be a boost in infrastructure funding. The budget has also highlighted the electrification of the entire broad gauge network by 2021-22 while 7,000 Route kms has been targeted in 2019-20. The target of new lines, gauge conversion and doubling/tripling etc.
for 2019-20 is 3750 kms against 3596 kms in 2018-19.

Giving a leg-up to the passenger amenities, the allocation for rail passenger comfort this fiscal has gone up to Rs 3,422.57 crore from Rs 1,657 crore in the last fiscal. Encouraging Metro expansion, she said that 657 km of metro rail network have become operational now. While freight loading target has increased to 1,274 Million Tonne (MT) from 1266 MT in Interim Budget, number of passengers increased to 8,593.79 million from 8,428.10 million in Interim Budget.

The total receipts of Indian Railways is Rs 2,16,935 crore which includes Rs 1,43,000 crore from goods and Rs 56,000 crore from passengers. The FM also announced that Railways will launch a massive programme of station modernisation to make train travel pleasant and satisfying for the common citizens.

Railways is already undertaking an exercise for redevelopment of 600 major railway stations which will improve passenger amenities at stations and turn them into world-class facilities with Wi-Fi, drinking water facilities, upgraded waiting rooms, television sets, passenger information kiosks and other such facilities.

Indian Railway Stations Development Corporation (IRSDC) is currently developing the Habibganj station in Madhya Pradesh and Gandhi Nagar station in Gujarat. Railways also have a tie-up with France for the station redevelopment programme. Under the agreement with France, the country will provide 7 lakh euros for big infrastructure projects creating world class station on the rail network. 

Also read: Apex Railway Unions Against Move to Corporatise Production Units

Modi government has managed to marginally reduce its fiscal deficit target for FY2019-20 to 3.3%, down from the 3.4% that was projected in the interim budget back in February 2019. The over two-hour long speech of Sitharaman saw only sporadic mentions for Indian Railways with the biggest takeaway being the encouragement for private sector.

According to Trinamool Congress, the railways was mentioned only for 2 minutes and 17 seconds in the entire budget speech which shows how much the government accords importance to railways after its merger with the General Budget. The FM, however, repeatedly mentioned the phrase - ‘Minimum government, maximum governance’ to which the Congress spokesperson replied, "So far - Maximum Intent, Minimum Content! Maximum Catchphrases, Minimum Catch-points!"