What to expect from NDA’s first rail budget: Focus on PPP model

rail-india1The new Indian government is poised to present its maiden  rail budget July 8 amid high expectations.  Given Prime Minister Narendra Modi’s emphasis on modernization of the rail infrastructure, one can expect some innovative and new policy steps for modernisation of the rail network, which serves as a lifeline for millions of Indians every day.  Railway Minister D.V. Sadanand Gowda may propose measures to upgrade the railway infrastructure from funds that can be obtained by tapping external sources such as foreign and private investments through the public-private partnerships (PPP) model.  There is speculation that the government may allow 100 per cent FDI into rail and freight …

Safety will be topmost priority, with then government expected to put  special focus on  streamlining the entire system to ensure that accidents are prevented, or at any rate minimized.  The railway minister is expected to announce initiatives that will aim at enhancing overall passenger comforts and introduce better amenities. The government has already announced a 14.2  percent hike in passenger fares, a controversial and unpopular move that was justified on grounds of severe cash crunch afflicting the Indian Railways.

Banking on the success of  PPP in the civil aviation sector, the railway minister will be looking to replicate this initiative  to boost modernization and bring in latest innovations.

The budget is expected to clear the government’s stand on some upcoming railway lines for PPP projects.  The addition of new lines, which has been delayed in the past two decades, will be something that the budget will focus on. Several new projects had been announced by the previous governments, mainly due to political reasons, but looking at the availability of resources and the pace at which they  are being implemented, it will require fast-track decision-making by the new government to get them going.

The country will be watching closely the new steps unveiled by the government to generate revenues for infrastructure development.  Delaying investments in infrastructure has led to a situation where the Indian Railways is rapidly losing business to the road sector.

An investment of nearly $160 billion over the 12th plan period is needed to revamp the railways. There are a number of key and specific areas which need priority focus and the upcoming railway budget is expected to include these.

Among these core area of focus are the railway’s need to complete dedicated freight corridor projects as well as build new tracks with infrastructural investment in the modernisation of signaling and telecom system.

Terminal infrastructure, including freight and passenger terminals, are in very poor condition and rank low in providing customer services. The Railways may look at partnering with the private sector in upgrading existing terminals as well as building new terminals. The PPP model is lauded for enabling private investors to complete the project in a stipulated time period that cuts costs due to  delays.

The Railways has to give attention to marketing its services which it has not been able to, on account of more attention given to operations. This results in poor utilisation of concepts like peak hour pricing and provision of premium services. The marketing enterprise of the private sector may help boost the railway’s revenues.

The budget is also expected to focus on using India’s information technology might to bring about efficiency. Inducting modern and updated technology in the areas of train control, safety, signaling, tracking and tracing and rolling stock would help in railways becoming more efficient than ever and providing greater and improved service.


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