In the last full Budget of its term, the NDA government charted out a plan for the Railways with a capital expenditure (capex) target of Rs 1.47 lakh crore and a revenue target of over Rs 2 lakh crore — the highest ever. It also pledged to upgrade the suburban railway network of Mumbai and Bengaluru.
This is in consonance with the government’s focus on long-term capacity augmentation and upgradation of the country’s railway network. Finance Minister Arun Jaitley’s steep capex target for the Railways comes despite the transporter struggling to spend money in capital works this year. This was displayed by the finance ministry’s slashing of the Gross Budgetary Support (GBS) by Rs 15,000 crore last month following a review.
The Budget’s ambitious capital spending roadmap is backed by Rs 53,989 crore — slightly less than the budgetary estimate figure of Rs 55,000 crore last year.
The capex figure is 22 per cent higher than 2017-18 (RE), and includes internal resources of Rs 11,500 crore. The Indian Railway Finance Corporation will raise Rs 28,500 crore, LIC will lend Rs 26,440 crore and Rs 27,000 crore will be other invested through Public-Private Partnerships (PPP). Railways will end the year with capital spending at Rs 1.2 lakh crore, some Rs 11,000 crore less than the original target.
Union Railway Minister Piyush Goyal said that next year, things will be done differently to achieve the required spending of capex. “We are changing the rules of the game,” Goyal said after the Budget. Electrification, signalling upgrade, track renewal— 3,900 km next fiscal — and commissioning of lines (new and doubling) together will take a bulk of the spending, he added.
There is a 148 per cent increase in the target of commissioning 1,000 route kilometres in new lines. Gauge conversion targets have also increased by 74 per cent to achieve the required 1,000 route kilometres. As opposed to the 945 km of doubling done in FY17, the Railways has targeted 2,100 km for FY18.
Bengaluru will get a new suburban network of 160 km, 60 km of which will be an elevated corridor at a capital cost of Rs 17,000 crore, Jaitley said. This will be done to reduce congestion and commuting time, he added.
Mumbai’s local train network got a major fillip as the Budget announced doubling of 90 km of existing lines at Rs 11,000 crore and another 150 km of new lines, including elevated tracks, at Rs 40,000 crore. Goyal later said he had spoken to Maharashtra Chief Minister Devendra Fadnavis, who is ready to give higher Floor Area Ratio in Transit Oriented Development for the network as part of a 50-50 joint venture with Railways.
A major policy announcement in the Budget was to ensure all trains and stations “progressively” get WiFi and CCTV coverage. Goyal said he was mulling the option of inviting private players for the job in a new model of engagement.
Continuing with the Modi government’s focus on station development and monetisation, Jaitley has earmarked money for the redevelopment of 600 more stations. The government also said all stations in India with footfall of over 25,000 would get escalators.
In what is perhaps a bigger challenge than the capex target, the set for earnings is Rs 2,01,090 crore— a seven per cent increase from last year.
The Railways expects to carry 1,216 million tonnes of freight — 51 million tonnes more than the last year — and has set a target to increase its passenger segment earnings to Rs 52,000 crore from the current Rs 50,125 crore. From non-fare earnings, it expects around Rs 20,790 crore to take its total Gross Traffic Receipts to Rs 2,00,840 crore. To put the figure in context, this year’s revised estimates for earnings is pegged at Rs 1,87,425 crore.
The Railways will end the fiscal with an operating ratio of 96 per cent, a negligible improvement from last year’s 96.5 per cent. It expects this headline number to improve to 92.8 per cent by the end of this fiscal year.