Railways left to fend for themselves

The Railways have been left to fend for themselves as a result of which the plan expenditure for 2013-14 has been pegged at Rs. 63,363 crore, just marginally more than the budget estimate for 2012-13 of Rs. 60,100 crore, which was revised downwards to Rs. 52,265 crore.

One of the reasons for the far from robust outlay is that the gross budgetary support is only to the tune of Rs. 26,000 crore, which was up by a meagre Rs. 2,000 crore from the allocation in 2012-13.

The crucial point about the projected plan expenditure is that it is banking upon a contribution of Rs. 6000 crore through the PPP route. Only time will tell if that gets realised.

The Railways are expecting their share of Rs. 2000 from the Road Safety fund, generate internal resources of Rs. 14,260 crore and raise money from the market to the tune of Rs. 15,103 crore.

How bad the railways are placed could be gauged from the fact that they intend to construct only 500 km. of new lines, 750 km. of doubling of lines and 450 km. of gauge conversion.

In 2012-13, construction of new lines was scaled down from the targeted 700 km. to 470 km., similarly gauge conversion too was scaled down to 575 km. from the target of 800 km. Only in the case of doubling the target of 700 km. will be exceeded marginally during the current fiscal.

Therefore it is not surprising that the fund appropriated to the Railway Development Fund has been slashed to Rs. 3,550 crore only for 2013-14. In 2012-13 the allotment was Rs. 10,557 crore, but revised downwards to Rs. 9,984 crore.

All this despite passing through the hike in diesel prices and electricity charges to the freight consumers and the promise to revise fares and freight charges at least twice a year to take care of possible hikes in fuel charges. Another hike could be expected in October perhaps.

During the current financial year, the failure to meet the goods and passenger targets led to a shortfall in revenue to the tune of Rs. 3,383 crore and 3,573 crore respectively for a total of Rs. 6,953 crore.

As a result of this the accounts have been revised to show a surplus of Rs. 10,409 crore from the projected Rs. 15,557 crore. This surplus has been managed by paying lower dividend and cutting down appropriation to the development fund by Rs. 4,574 crore. Only a dividend of Rs. 5,314.05 crore will be paid during the current fiscal instead of the targeted 6,650.34 crore.

Nevertheless, the Railways claimed they had brought the operating ratio down to 88.8 per cent during the current financial year and improve it to Rs. 87.8 crore and have a fund surplus of Rs. 12,000 crore.

The Ministry hopes to transport 1,047 million tonnes of freight, about 40 million tonnes more than this year while passenger growth is pegged at 5.2 per cent. The gross traffic receipts are expected to be around Rs. 1.43 lakh crore in 2013-14.


Railways ties up funds at zonal levels for 360 pending projects

With the Ministry of Railways back with the Congress after 16 years, a fresh wave of change is sweeping through the ministry.

For the first time, the railways has prioritised its 360 pending projects worth about Rs 4 lakh crore and tied up funds with them at zonal levels.

The ministry is also cautious about spending this time, as for the first time in a decade or so, it did not go for any supplementary demand for grants in the monsoon and winter sessions of Parliament.

“The railway is right now focusing on the existing projects. We have tied up funds for works at zonal levels and the power to reappropriate funds from one work to another vest with the board now in contrast to the zones earlier,” a senior railway ministry official told Business Standard.

“We also did not go for any supplementary demand for grants during the parliamentary session as the intention was to focus our resources on the budgeted works rather than starting new works.”

The railways, which went for a freight hike of 20-25 per cent in March 2012, is expecting a surplus of around Rs 12,000 crore.

The targeted annual Plan outlay of around Rs 60,100 crore in 2012-13 is expected to be financed by gross budgetary support of Rs 24,000 crore, internal resources of Rs 18,050 crore, extra budgetary resources of Rs 16,050 crore and railways safety fund of Rs 2,000 crore.

The funds raised by Indian Railways Finance Corp (IRFC) are totally dedicated to buy rolling stock.

In 2011-12, the railways invested these funds for project financing. But now, it is investing money on assets that have sure shot returns. The rolling stock being the only asset which starts generating money from the first day is the safest bet in contrast to long gestation period projects.

Among the key works under plan are: New lines, gauge conversion, track renewals, signaling and telecommunication and rolling stock. All the planned expenditure is dedicated on this. Among the key budgeted non-planned expenditure in 2012-13 are: 37 per cent on staff salaries, 16 per cent on pension funds and 17 per cent on fuel charges.


Indian Railways to use vacant land for commercial purpose

Indian Railways has planned utilisation of railway vacant land for commercial use. For this, a statutory body, Rail Land Development Authority (RLDA), has been set up.

Railways network occupies a land area of about 10 lakh acres. About 90% of this land is directly under railway tracks, yards, workshops and allied infrastructure. The vacant land, measuring about 1.13 lakh acres, is mostly in the form of a narrow strip along tracks which railways has been utilising or plans to utilise for its expansion in the form of doubling, third line, quadrupling, gauge conversion, freight corridors, yard remodeling, traffic facility works, workshops, etc and for servicing and maintenance of track and other rail related infrastructure.


Chennai-Pondy coastal railway line may be built by private companies

The east coast railway line from Chennai to Puducherry and Cuddalore, via Mamallapuram, may now be built with private participation. The railway ministry has included the . 523 crore project on a list of 37 projects that could be handed over to private firms.

The project — part of the proposed Chennai-Kanyakumari coastal line — has been approved by the railway board to provide a link to fast developing areas along the Old Mahabalipuram Road (OMR).

The 179km line, to be laid between OMR and the East Coast Road, is expected to connect Sholinganallur, Kovalam, Tiruporur, Mamallapuram, Kalpakkam, Koovathur, Cheyyur, Marakkanam, Kunimedu, Kuiyilappalayam, Jipmer in Puducherry, Bahour, Varakalpattu, Tirupadipuliyur and Cuddalore Fort.

“As of now, railways is doing the project but may want to consider different options because of the huge cost involved and the need to finish it fast,” said a senior Southern Railway official. The new line is to be taken up as a “socially desirable” project and the railways has not mentioned any rate of return for the investor. Companies come in where govt funds run dry.

The railway line was sanctioned in the supplementary budget of 2007, but only 26 crore was sanctioned in subsequent years for land survey, location survey and other preliminary works. Meanwhile, the cost escalated from 523 crore to 800 crore. The final location survey was done in 2011.
“Going by the rate at which the ministry is able to sanction funds the line will take more than 10 years to complete. This is the reason the railway board is looking at different options, including privatisation of the works. The board is yet to finalise the model in which the project will be taken up,” he added.

To execute such projects, a cost sharing-freight rebate model, full contribution model, under-a-special-purpose vehicle model and privateline model have been proposed. The terms and conditions say the land will be acquired and owned by railways.

The ministry has mooted private participation for new lines, gauge conversion, doubling and to lay third line because several projects are being delayed due to slow sanctioning of money. Every project may not get full funds because money will have to be allocatedfor all projectsbeing carried out in the country.