Railway Budget 2010 – Key Takeaways

Citing the need to support growth, the rail budget presented today: maintained status quo on passenger fares/freight tariffs, announced a token reduction of Rs100/wagon in freight charges for foodgrains and kerosene, and lowered service charges on e-ticketing.

The budget has targeted a 6% increase in freight loading to 944mt in FY11. Initiatives announced to help achieve this include : (1) a modified wagon investment scheme, (2) allowing private operators to run special freight trains, and (3) setting up of auto and ancillary hubs.

Grand Indian Railways Vision 2020 – Key features include: (1) increasing gross revenues of railways from 1.2% of GDP to 3%, and (2) adding 25,000kms to the current route length of 64,099km (this compares with an addition of 10,419kms during the last five decades). The Ministry hopes to achieve this through government funding and public-private partnerships. While the railways will be setting up a task force to clear investment proposals within 100 days of submission, we view the plans appear ambitious given:(1) resource constraints, and (2) limited success so far via the PPP route. Can the Railways really implement this ?