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Rail Budget 2014-15: 58 new trains announced; stress on passenger safety, cleanliness

Rail-BudgetPresenting his maiden Rail Budget in Lok Sabha on Tuesday, Union Railway Minister Sadananda Gowda announced 58 new trains including 5 new Jansadharans, 5 premium trains, 6 AC express, 27 express trains, 8 passenger trains, 2 MEMU trains and 5 DEMUs. He further announced extension of 11 trains’ route.

Stating that bullet trains are a priority, the Railway Minister proposed the first bullet train between Mumbai and Ahmadabad route. Railways will also launch high-speed trains to connect major cities, he said.

Gowda said his ministry would also seek cabinet approval for allowing foreign direct investment in the state-owned network, but passenger services would be excluded.

“The bulk of our future projects will be… by the PPP model,” he told India`s parliament, referring to public-private partnerships.

India`s railway, the world`s fourth-largest, has suffered from years of low investment and populist policies to subsidise fares. This has turned a once-mighty system into a slow and congested network that crimps economic growth.

The decision to push private investment signals the appetite Prime Minister Narendra Modi`s new government has for taking tough and unpopular decisions he has said are needed to revive the economy.

Reform of the railways has long proven politically sensitive. Successive governments have backed away from modernization, preferring instead to use the system to provide cheap transport for voters, and jobs for 1.3 million people.

Here are the Highlights of Indian Railways:

Major Challenges facing the Railway System

-Vast tracts of hinterland waiting for rail connectivity.

-Railways expected to earn like a commercial enterprise but serve like a welfare organization.

-Railways carry Social Service Obligation of more than Rs 20,000 cr by carrying services below cost. This is nearly 16.6% of GTR and is almost half of Railways’ Plan Outlay under budgetary sources.

-Surplus revenues declining; Hardly any adequate resources for its development works.

-Tariff policy adopted lacked rational approach; passenger fares kept lower than costs; loss per passenger kilometer increased from 10 Paise per Km in 2000-01 to 23 Paise in 2012-13.

-‘Decade of Golden Dilemma’ – choosing between commercial and social viability.

-Share of Railways in freight traffic coming down consistently.

-Rs 5 lakh crore required for ongoing projects alone.

-Focus so far in sanctioning more and more projects with inadequate prioritization rather than completing them; Of the 674 projects worth Rs 1,57,883 cr sanctioned in the last 30 years, only 3
17 could be completed. Completing the balance requires Rs 1,82,000 cr.

-Most of Gross Traffic Receipts is spent on fuel, salary and pension, track & coach maintenance and on safety works . In the year 2013-14, Gross Traffic Receipts were Rs 1,39,558 crore and total Working Expenses were Rs 1,30,321 crore,

-The surplus, after paying obligatory dividend and l ease charges, was Rs 11,754 crore in 2007-08 and is estimated to be Rs 602 crore in the current financial year.

Course Correction and Initiatives

-Works to be re-prioritized with more focus on doubling and tripling to decongest the over-utilized network.

-Recent fare and tariff hike to mop additional revenue of about Rs 8,000 cr.

-Alternate resource mobilization need to be explored as enlisted.

a. Leveraging Railway PSU Resources by bringing in the investible surplus funds in infrastructure projects of Railways.

b. Domestic investments and FDI in rail infrastructure.

c. Pursuing Public Private Partnership.

-Near Plan-holiday approach.

-Prioritizing and setting timelines for completion of the ongoing projects.

-Decision Support System for project implementation.

-Strategic partnerships and transparency in procurements.

-Aggressive indigenization of imported products.

-Developing locomotives, coaches and wagon leasing Market.

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