Tag Archives: Railway Budget

5 key steps Railways has taken to fast track implementation of projects

Looking to push Indian Railways as an engine of growth for the economy, Ministry of Railways has expedited implementation of some key projects announced during this year’s Rail Budget.

“Ministry of Railways included 77 doubling, 4 new line and 1 gauge conversion projects in Railway Budget 2015-16. The projects were included primarily with a viewpoint to create additional carrying capacity. Fast tracking of these projects was need of the hour so as to reap benefits of the projects as s ..

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Posted by on October 23, 2015 in Uncategorized


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Railways are changing for the better

Indian Railways suffers from a perception issue – and that’s preventing many from seeing the good work being undertaken under Railways Minister Suresh Prabhu.

Misconceptions galore

Any colossal organisation will take gargantuan efforts and considerable time to transform itself. Against this backdrop, I would like to highlight six key issues where public perception, stated below, is on the wrong track.

There have been no Big Bang announcements: While announcing his maiden Railway Budget this year, the Minister had clearly articulated that it was the beginning of a five-year plan. Over 200 capacity enhancement projects which had been announced in earlier budgets are yet to be completed, and these are being addressed on priority.

It is therefore natural to expect a number of key steps across the board, to consolidate and complete existing projects, which will come together to result in holistic change.

One of the biggest developments is the push towards mega FDI and “Make in India” by Railways. Top global firms viz. GE, EMD, Bombardier, Alstom and Siemens, have bid for two state of the art electric and diesel locomotive manufacturing projects aggregating to ₹42,000 crore.

Budget announcements not implemented: Granular progress and growth is not being appropriately perceived and appreciated by critics. Seventy nine Budget announcements have already been implemented, on issues like e-catering in 1,000 trains, Wi-Fi in 11 stations, construction of toilets at 67 stations and energy and water audits across 150 locations.

Another game-changer will be the accelerated implementation of dedicated freight corridors (DFC) which will add 3,300 Km of new lines. As many as ₹17,000 crore of tenders have been awarded in the past nine months which is 1.6 times the tenders awarded since the project’s inception. The first 56 km of this project is likely to be commissioned by end of this year.

Where’s the money to address the significant investment deficit? Instead of big bang announcements, the focus has shifted to identifying financial resources to complete all existing projects. A five-year Capex Budget of ₹8.56 lakh Crore has been finalised with a realistic plan of where the money will come from.

IR is rapidly diversifying its sources of finance. Gross budgetary support will account for only 30 per cent (2.56 lakh crore) of this planned investment, while project debt will account for 28 per cent (2.5 lakh crore). The rest will be sourced from JVs with various State governments (19 States have already come on board, with a commitment of 1.2 lakh crore); public private partnerships under new and more acceptable structures (₹1.3 lakh crore); internal generation (1 lakh crore), leasing of rolling stock (1 lakh crore) and long term loans from LIC (1.5 lakh crore).

In addition to increased private financing, IR is also looking at creating a long term Railways investment fund with multilateral institutions as anchor investors and participation from the world’s leading sovereign wealth funds and long term pension funds.

Administrative issues

The funds may be tied up but how will they be spent? The diffident bureaucracy and an acute lack of institutional capacity to prioritise spending on critical projects are required to be addressed.

The Minister has already delegated substantial decision making powers to the functional levels. This has expedited decision making, thereby leading to more capital spending. In just the first quarter of this year, IR has exceeded the targeted capex by over ₹4,500 crore. It stands at ₹17,734 crore, which is 134 per cent of the initial target (₹13,231 crore). In fact, IR has exceeded the target spends across parameters like new lines, electrification, gauge conversion and track renewals.

Safety issues will continue to plague Indian Railways: There is a more focused approach now. Under the ‘zero accident policy’, ₹1.27 lakh crore is proposed to be spent on improving rail safety (on renewal of tracks, better signalling and accident-resistant coaches and engines), minimising the scope for accidents. For unmanned LCs, an early warning system designed by IIT Kanpur is being field tested for rapid deployment across the country.

Trains will never be on time, especially during the foggy winter months: Sophisticated technology like thermal imaging and instrument landing systems have helped the aviation industry overcome this. I understand that the ministry is evaluating proposals for providing thermal imaging inside locomotives — to help run trains even during extremely low visibility under heavy fog.

Since such weather conditions coincide with the peak freight loading season, this will improve capacity utilisation, loss of punctuality and address key safety issues.

A robust railway network, in line with global standards, will transform our socio-economic fabric.

RANA KAPOOR . The writer is President, Assocham , and MD & CEO, YES Bank

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Posted by on October 17, 2015 in Uncategorized


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Confused signals on Railways reform

For the last three decades the Centre has been toying with the idea of restructuring Indian Railways. While the Railway Reform Committee (1981) headed by HC Sarin (it had . Manmohan Singh as one of the members) had a detailed look at this issue and submitted its final report in 1985, the first serious study on changing the organisational structure as well as the ethos of the Railways was carried out by the Prakash Tandon Committee in 1994. Simultaneously, the Gupta-Narain Committee also examined the rationalisation of the management services the same year.

Subsequently, Rakesh Mohan, while submitting his report in 2001, delved into this issue at great length. In 2014, in his National Transport Development Policy Committee Report, he devoted considerable energy on suggesting means to invigorate the organisation. The High Level Railway Restructuring Committee headed by Bibek Debroy is another effort to streamline this mammoth organisation.

The Indian Railways plays a significant role in the life of every Indian. Reasonably then, every Indian has a right to worry about its efficient functioning and nurture the hope that it will ride a trajectory of unstinted growth.

Every government recognises this, and hence the plethora of committees. But, forming a committee is one thing; implementing its recommendations is another!

Contradictory views

The interim report of Debroy’s committee needs in-depth scrutiny not only of its recommendations, but also of how best they can be implemented.

The subject of restructuring is covered in seven chapters; the second chapter is devoted to liberalisation, the entry of private operators and the unbundling of the Railways into two separate entities — infrastructure and operating companies— almost on the lines of the restructuring of British Rail.

The very idea militates against the avowed policy of the government to abstain from any move towards privatisation.

On the other hand, Chapter 5 examines the issue of management cohesiveness of the organisation in great detail and proposes many far-reaching recommendations.

Yet, the contents of Chapters 2 and 5 are quite contrary to each other, and profess two different philosophies! If the committee is suggesting bringing in private players and having two separate entities as stated in Para 2.43 of the report, then Chapter 5 is redundant.

With the entry of private players, the Railway Management should reduce in size. It will need a different prescription for survival. It is a vexatious issue and will bring the government in direct confrontation with unions and associations of every kind.

With the inclusion of two mutually conflicting chapters, the report loses focus and emanates confusing signals. It is hoped that the final version will resolve this dichotomy.

What’s the timeframe?

The other important issue is the time-table for the implementation of the suggested reforms. There is an urgent need to arrange for the flow of funds, preferably through public-private partnership (PPP). The main obstacle here is the lack of trust among private players about the intentions of the Railway administration.

The esoteric Railway Budget cannot be comprehended by a layperson, leading to doubts in the minds of prospective investors. Accounting reforms — talks have been going on for more than a decade — can bridge this gap in perception. It would, thereofore, be better if accounting reforms saw a closure immediately.

Concomitantly, the Railway Board can be restructured to work on business lines instead of its present petty departmental approach, euphemistically termed ‘functional’. Both these targets are within the realm of possibility.

The report rightly roots for a regulator as a statutory body. Without a strong regulator in place, any possibility of introducing private players as operators will remain a dream. Putting a regulator in place within a year of implementation of the report will have a salutary effect on the atmosphere for investments in the Railways.

A cast iron case has been made out for concentrating on the core activities of the Railways as a transporter. Various suggestions are well thought out, but again, many of these may be unpalatable. Their fruition will depend more on whether the government has the stomach to push matters to their logical conclusion or not, and less on their propriety and desirability.

A holistic approach

The report can be commended for its holistic approach, barring the conflicting message on privatisation. Still, it can lay claim to being a complete package. If only some parts are finally accepted, it must be ensured that it does not leave gaping holes in the jigsaw puzzle.

This report is different from previous ones on two counts: first, it lays down a time-table for implementation, and second, it also lights a pathway to be followed for speedy and smooth implementation of its recommendations by way of “setting up of a strong formal implementation and monitoring mechanism…a dedicated cross-functional team be set-up in the ministry”. Debroy has termed this report a draft report. It is hoped the final report will take care of issues mentioned here so that the recommendations will help Indian Railways modernise itself without delay. Hopefully, the Centre will muster up the courage to change the working ethos of Indian Railways.

The writer is a former chairman of the Railway Board. He was also associated with the National Transport Development Policy Committee’s report

Business Line

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Posted by on June 6, 2015 in Uncategorized


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Railway Ministry revs up implementation of budget proposals

In an unprecedented pace, the Railway ministry has set a unique record with implementation 39 proposals of the Railway Budget 2015 -16, ranging from improvement in passenger amenities system to infrastructure development, in just 36 days.

Under the implementation strategy, comprehensive action plans were formulated on all budget announcements. Railway minister Suresh Prabhakar Prabhu and minister of state for Railways Manoj Sinha have been personally monitoring the implementation and undertaking periodical review.The entire machinery of Indian Railways was geared up to implement the budgetary proposals.

The monitoring and periodical reviews are also being undertaken at the Railway Board level, zonal Railway level and Railway Division level.

To ensure effective and efficient online monitoring, the Railway ministry has developed a special web based software e-Samiksha to keep an eye on implementation.

The ministry is next only to PMO, External Affairs ministry, Road Transport and Highways ministry and HRD ministry to have this kind of online monitoring mechanism.

Mentioned hereunder is the list of proposals implemented by the Railway ministry:

— Creation of new department for housekeeping to address the issue of cleanliness in a more integrated and coordinated manner.
—Launching of disposable bags for garbage disposal as a pilot project in Mumbai-Amritsar Punjab mail.
—Manufacturing of new non-AC coaches having dustbins at Integral Coach Factory (ICF) from May 1.
—Engagement of National Institute of Fashion Technology (NIFT), Delhi for designing of bedroll etc.
— New mechanized laundries at Kochiveli, Malda town and Santragachhi to supply clean linen taking total of such laundries to 33. Besides, 29 more locations have been identified.
—  Operationalisation of Passenger Helpline 138 which will work as an interface for queries/complaints related to medical emergency, cleanliness, food and catering, coach maintenance, linen etc.
— Operationalisation of Security Helpline 182  to report any unsavoury incidents like crime against women, onboard unlawful activity, train accidents, medical attention required and fire etc.
— An application and a portal to redress railway related complaints for online tracking of complaints.
— Launching of ‘Operation 5 minutes” as pilot project on Chennai suburban railway where passengers can buy paperless unreserved tickets on their mobile.
— Instructions for differently-abled travellers to purchase concessional E-tickets after one time registration issued.
— E-ticketing portal in Hindi is ready for launch.

—Introduction of e-Catering to enable the passengers to place an order for a meal through a phone call or an SMS. The service is presently available in 134 pairs of trains.

—Operationalisation of online booking of retiring rooms.

—Identification of 73 pairs of trains for introducing hand-held terminals to TTEs. Supply is expected to be received by the end of May.

— Operationalisation of SMS alert for advance arrival of train at destination.
Centrally managed railway display network is ready for technology demonstration.

— Launching pilot project for providing surveillance cameras at ICF.

—On board entertainment on Kalka-Shatabdi Express which is now being extended to other trains.

—Instructions to provide mobile charging facilities in all new general class coaches. The facilities will be provided in 3000 existing coaches in the current fiscal..

— Increase in quota for lower berths for senior citizens from 2 to 4 per coach.

—Launching of e-Concierge services in 22 railway stations.

—Identification of five trains for augmentation of capacity from 24 to 26 coaches.
Instructions issued for TTEs to help senior citizens/pregnant women to get lower berths.

—Instructions for reserving middle bay for women and senior citizens.

—Inauguration of perishable cargo centre at Azadpur Mandi to help farmers and consumers in a big way. The ripening of fruits and cold storage facilities at this cargo centre will help the farmers get a good price and good market for their product.

—Instructions to liberalize the private freight terminal policy.

—Review of all pending recommendations by Kakodkar committee on safety by the Railway Board.

— Formation of Kayakalp Council led by eminent industrialist Ratan Tata to recommend innovative methods and processes for the improvement, betterment and transformation of the Indian Railways.

—Constitution of taskforce for drafting IT vision for Indian Railways.

—Constitution of a committee under Ajay Shankar for revamping of the PPP cell.

—Signing of a MoU between Railway ministry, Coal ministry and the Odisha government for creation of a special purpose vehicle (SPV) to help expedite railway connectivity projects for coal transportation in Odisha.

— Signing of a MoU with the Life Insurance Corporation (LIC) to provide highest ever funding of Rs 1.5 lakh crore for Railways. This move will ultimately help railways growth through augmentation of its financial resources.

— Approval for rail connectivity to Dighi Port through PPP.

—Instructions for organizing training of frontline staffs on soft skills.

—Negotiations for financing railway projects through World Bank commenced.

— Initiation of process for putting in place a regulator.

—Signing of a MoU for Railway Research Centre at Mumbai University.

— Signing of a MoU with National Institute of Designing (NID) for setting up of a Railway Design Centre in its campus at Ahmadabad. This will help improve customer’s happiness by way of better designed coaches and providing cost effective solutions to problems faced by passengers during train travel.

— Signing of a MoU between Railway ministry, Coal ministry and Jharkhand government of Jharkhand for creation of a SPV to help expedite railway connectivity projects for coal transportation in Jharkhand.

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Posted by on May 10, 2015 in Uncategorized


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Saving the railways

The Parliamentary standing committee for the railways has, in its latest report on the demand for grants (2015-16), worked to identify why the finances of the Indian railways and the organisation itself are in crisis and what needs doing to set things right. Its confidence that the organisation can be turned around is based on what happened in the period to 2007-08 when its operating efficiency, measured by the share of gross working expenses in its gross earnings, improved to 76 per cent. The report, while referring to the fruitless debate within the railways for decades on increasing the length of trains, mentions foremost the key obstacle of “departmentalism”. Lalu Prasad, under whose watch the turnaround took place, solved this problem by substantially delegating authority.

The report makes two vital recommendations which need to be welcomed. One, end for some time, till financial health recovers, the duality of paying with one hand gross budgetary support for the railway plan and taking away with the other the annual dividend as this is “contradictory and counter-productive”. The second recommendation involves the social service obligation of the railways, incurred from low suburban fares and freight rates for some essential commodities and uneconomical branch lines, estimated at Rs 25,000 crore per year. A procedure should be worked out to reimburse this amount to the railways. If these two measures (a temporary halt in dividend payment and regular refund of social service obligation expenditure) are taken along with increased provisioning for the safety fund, then the railways can indeed be put on course for a turnaround.

But one more critical element is needed for which the committee has no clear answer. The report repeatedly says that the railways are run unprofessionally and bureaucratically, and the answer is to have a national policy that can act as a guiding force for the railway network irrespective of the government in power. It also recommends a detailed road map which ensures strict financial discipline and achievement of physical targets in a stipulated time frame with no cost escalation and delay. Can a mere policy deliver all this? The contradiction in the committee’s report comes out when it notes disapprovingly that much has been made of the latest railway budget not introducing any new trains, and goes on to ask what happens to citizens in remote areas waiting for decades for a rail link. The report decries text book solutions of privatisation, downsizing and frequent passenger fare hikes as “politically unacceptable” but also says fares and freight rates have to be demand-cum-market driven and fixed differently for different segments. Besides, pricing should also fetch a market-related return on capital. No useful report can be all things to everybody.

Business standard

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Posted by on April 30, 2015 in Uncategorized


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Prabhu for pruning freight rates over two years

Railway minister Suresh Prabhu expects to reduce the state-run behemoth’s freight rates sharply in the next couple of years to take on competition from the road sector and even undertake disinvestment in some of the ministry’s enterprises.

The minister said this would be possible as the railways is targeting a 50 per cent rise in revenue within a five year time frame, while he anticipates gross expenditure to rise by a far more modest rate of 15 per cent. “The spread can be used to either show an increase in profitability of railway operations or passed on as a cut in freight rates,” he told The Indian Express.

The minister said the revenues would rise riding the efficiency of the railway-owned enterprises. Those enterprises will shoulder the largest responsibility of adding to tracks and rolling stock of the railways from now.

Prabhu said that making companies like Ircon undertake additional capital expenditure also made sense as it would raise their valuations. The additional valuation allows for their disinvestment at attractive rates, he added. The disinvestment would provide additional revenue to railways.

This buffer can then be used to offer lower freight rates. Making capital expenditure only through the railway ministry’s own divisions did not offer any such advantage. With a larger capacity to run freight trains and more tracks to run them on, Prabhu said, he was sure he had a “game changer plan”.

“I would not need to service the entire additional money from the railway earnings only. I will get it from these companies, which adds to my capacity massively. So it becomes a game changer for the railways,” he said.

In the Railway Budget 2015-16 the minister has penciled an annual freight revenue target of 1.5 billion tonnes to be reached in five years, a 50 per cent increase from the current 1 billion tonnes per year. Most of the annual increase, the minister expects to earn by reducing the freight rates to lower than what truck operators demand. “It’s a doable plan,” he said.

Prabhu said this line of action has been overlooked by commentators who have instead claimed it would be difficult for him to finance the ambitious investment of Rs 8.56 lakh crore between now and 2019. They have pointed out that financing this level of investment would need about Rs 1,80,000 crore to be spent each year. But the Railway Budget has projected a plan outlay of only Rs 1,00,011 crore, a gap of nearly Rs 80,000 crore.

Within that, too, the railways has inked in Rs 17,655 crore as additional market borrowing. The interest cost on this borrowing will be a huge drag on railway revenue, they point out.

Prabhu said he is aware of the cost. He would consequently prefer to let the public sector companies share in the expansion plan. “So I don’t need budget for this from the department’s limited resource. Their borrowing on their balance sheet does not increase my liability,” he signs off.

Indian Express

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Posted by on April 17, 2015 in Uncategorized


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Southern Railway Nets Almost 4-fold from Advance Booking

The Railways’ decision to allow booking of tickets 120 days ahead of the journey enabled Southern Railway to earn 3.5 times the usual revenue on day one of its implementation.

The 2015-16 Railway budget had extended to 120 days the advance booking period for passenger travel. When it came into effect on April 1, footfalls at booking counters increased and so did the revenue, as expected.

“The Southern Railway netted `10.89 crore on April 1. There were 1,03,000 transactions for 2,52,000 passengers. These figures are only of bookings at railway counters,” said L Nagarajan, chief reservation supervisor at the Coimbatore Junction station.

“In Coimbatore, the advance bookings fetched about `39 lakh on April 1. We opened nine counters to handle the extra crowd without getting any additional staff,” he added.

Online advance booking has also started booming. “My regular customers who book tickets a month in advance are now planning their travel two months ahead,” said S Karventhan, a ticket booking agent.

Some are even more early. “A few of my customers who travel regularly have booked for end of July. There is an increase in bookings as well. On an average I book 20 tickets a day. Yesterday I booked 70 tickets,” he told Express.

However, many feel that the move would further reduce ticket availability. P Manoj Kumar, an IT employee who works in Chennai and visits hometown Kovai on holidays, feels this will benefit only agents who would block many tickets and sell them at huge profits to actual passengers. “They can now block tickets longer. It makes travel difficult for people like me who cannot plan the journey so much in advance,” he said.

An Army jawan, K G Prakash, who was waiting to book his ticket at Coimbatore Junction, also felt the change would put people like him at a disadvantage as they might have to report for duty at very short notice. “We won’t have the time to plan the journey and book tickets, unlike civilians,” he said.

Karventhan, the booking agent, also felt that the facility would not benefit all passengers. “It is good only for those who travel regularly to the same place,” he said.


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Posted by on April 4, 2015 in Uncategorized


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