Rlys to offer sops to woo pvt players

With projects worth Rs 1.45 lakh crore pending, the cash-strapped railways plans to offer incentives, including tax holidays, to attract private players to invest in pending socially desirable and strategically located projects. A parliamentary panel was recently informed that the railways will approach the finance ministry after formulating the proposal.

The move is an attempt to make investments in socially desirable but economically unviable projects attractive under public private partnership (PPP) mode by offering tax incentives and concessions after the lukewarm response of private players.

The state-run transporter is considering incentives like tax holidays under the I-T Act, exemptions from central excise and custom duty on purchase of capital goods, relief from sales tax and VAT and relief from payment of octroi and entry tax.

Parliament’s Railway Convention committee has asked the railways to examine the prospect of PPP in socially desirable projects in backward areas in consultation with finance ministry.

“Most of the socially desirable projects have low financial returns in the short run, but yield high socioeconomic dividends. The government has to support such projects,” a railway official said.

Faced with funds crunch and a large number of pending projects, railways has given priority to those projects in which state governments —such as Karnataka, AP, MP, Chhattisgarh and Maharashtra — are sharing costs.


Train fares may go up more often now

Get ready for more frequent hikes in rail fares. In a move aimed at increasing the earnings of the cash-strapped railways, the cabinet on Thursday approved an “independent” tariff body for the state-owned transporter.

The setting up of Rail Tariff Regulatory Authority will largely de-link passenger fares from political process. Populism practised by successive rail ministers left the fares — a political hot potato — largely unchanged for 10 years, till January.

It has taken a toll on the financial health of the railways, which carries 23 million people a day.

The railway ministry is looking to review fares and freight charges again in October. The tariff authority is likely to preside over the exercise now.

As freight has been cross-subsiding passenger fares, losses in the passenger segment have been mounting and are expected to touch R25,000 crore this financial year. This will be a four-fold increase over the figure of Rs. 6,159 crore in 2004-05.

In contrast, input costs of the railways, the world’s third largest train system, increased by 10.6% every year between 2004-05 and 2010-11.

An executive order will be brought to allow the authority to start work with immediate effect.

The rail tariff regulatory authority bill will have to be ratified by Parliament by amending the Railway Act of 1989.

The authority would invite suggestions from all stakeholders, including consumer and citizen groups, and function as a “strong guiding factor” in fixing tariffs, an official told HT on condition of anonymity.

A retired RBI deputy governor or retired chairman of a PSU bank will head the five-member body. Two members will be former rail officials and remaining will be ‘outside experts’.

The idea of a tariff authority was mooted in 2011 when Dinesh Trivedi was the minister, but was put in cold storage.

Delivering the rail budget speech early this year, Pawan Kumar Bansal, who resigned in May, again announced the authority and sent it for inter-ministerial consultations.


2012 – A tough year for cash strapped Indian Railways.

Cash-strapped railways faced a tough year financially which was compounded by indecisions and policy delays as the national transporter witnessed four ministerial changes because of political compulsions.

While the Railway Ministry came to the Congress fold after a gap of about a decade-and-a-half after the withdrawal of Trinamool Congress support to UPA, the government looks set for a hike in passenger fares, which had remained stagnant over the years.

The railways witnessed a widening gap between operational cost and passenger earnings while freight revenue also fell below the target in 2012. Railways earned Rs 67,879.95 crore till October as against the target of Rs 70,147.74 crore, 3.23 per cent less than the budgeted provision.

In view of this shortfall, the plan outlay for the current fiscal has been downgraded from Rs 60,100 crore to Rs 55,881 crore.

Currently, the railways have 347 ongoing projects for new lines, gauge conversion and doubling but shortage of funds has forced curtailing of allocations for majority of them.

The year witnessed commissioning of the much-delayed Rae Bareli coach factory. Besides the factory, the railways also announced setting up of a wheel factory at Congress President Sonia Gandhi’s constituency.

The year began with Railway Minister Dinesh Trivedi proposing about 15 per cent passenger fare hike in the Rail Budget. However, it was rolled back as Trivedi drew the wrath of Trinamool supremo Mamata Banerjee.

Trivedi was aiming to mop up about Rs 4000 crore from the fare hike. He was, however, replaced by Banerjee loyalist Mukul Roy, who remained mostly absent from the ministry and ran the key infrastructure department for nearly seven months from Kolkata.

Though many West Bengal-centric projects including Kanchrapara rail factory, beautification of stations and opening of passenger reservation centres in the state were initiated during Roy’s regime, the much-needed move to hike passenger tariff was put in the back-burner.

After the withdrawal of Trinamool support in September, Congress’ C P Joshi was given additional charge of the ministry for about a month. His brief tenure saw the revival of the proposal for setting up of Rail Tariff Authority (RTA) to suggest tariff hike in passenger and freight rates.

Pawan Kumar Bansal, who became the fourth minister in a year to occupy the Rail Bhavan, has been giving ample hints of raising the fares realising the dire financial needs of the national transporter.

“If passenger fares will be hiked then it will not be for the sake of raising fares, it will be done to improve passenger amenities,” he had said after taking over in October.

Both ministers of State for Railways – Adhir Ranjan Chowdhury and K J Suryaparakash Reddy – have also strongly advocated raising of passenger fares to generate funds.

Reviewing the performance, Prime Minister Manmohan Singh has asked the railways to expedite the process of setting up the Rail Tariff Authority.

Singh has also asked the ministry to finalise bidding documents for two big ticket projects – locomotive factories at Madhepura and Marhora in Bihar.

Though seven routes have been identified for undertaking feasibility survey for running bullet trains at 300 kms per hour speed, the Mumbai-Ahmedabad route is to be taken up by the railways as a priority.