Published Editorial

Modi Express on the right track

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Hindu Business Line

By

Abhaya Agarwal

Partner- Infrastructure Practice, EY

Nikhil Jain

Senior Professional – Infrastructure Practice, EY

The first Railway Budget of the new government has been more of a balancing act. On the one hand was an organisation with deteriorating financial health and overstretched infrastructure which needed some bold measures for its revival. On the other hand were high expectations from the people anticipating quick-fix solutions.

The Railways Minister, however, chose to take a pragmatic path and focus on completing pending projects that were announced by his predecessors. There are about 357 incomplete projects which require investment of about ₹182,000 crore. Many of these projects were pending for reasons like lack of coordination between Indian Railways and State governments, land acquisition issues, want of funds, among others.

The Minister, having made his intent clear, has announced the formation of two project management groups to resolve the issues and overcome delays in project execution. This is a welcome step, but will be effective only if these project management groups are operationalised immediately.

PPP initiative

The Government has proposed the highest ever planned outlay of ₹65,455 crore for the current fiscal year with close to half of it coming in form of budgetary support. This is the best the Government could have amidst fiscal deficit and inflationary pressures.

The rest of the planned outlay is proposed to be met by a combination of market borrowing and internal accruals. The Budget also aims to mobilise funds for implementing new projects from the private sector.

The Minister is targeting to raise about 9-10 per cent of the planned outlay (₹6,050 crore) from public private partnership (PPP) projects. Though this is almost six times the amount that was announced two years ago, there has been very little progress of PPP projects on the ground.

The biggest challenge for the Indian Railways in promoting PPP projects has been in creating a conducive environment. But with only about three-quarters left for this fiscal year the target looks ambitious. The Budget also pins hopes on the PPP route to revive its infrastructure but the details required are yet to be spelt out. The finer details and the conducive environment are prerequisites to meet the PPP investment to the tune of ₹4,13,000 crore over the next 10 years, envisaged by the expert group for modernisation of the Indian Railways headed by Sam Pitroda.

The Budget has proposed some ambitious projects such as developing the Greenfield Diamond Quadrilateral High Speed Rail networks. These projects have a very long gestation period of 10-12 years and require a long-term commitment. If designed and implemented well, these projects can drastically change the way people travel. This Budget has laid a big thrust on passenger amenities such as providing sufficient water supply at all the stations, toilets, escalators and lifts and battery-operated cars. The Budget has significantly increased the allocation for improving the cleanliness and hygiene at all stations.

Further, this Budget has announced many initiatives primarily driven by use of technology. A major revamping and nearly tripling of capacity of the online ticketing system is an important move. Use of GIS mapping and digitisation of railway land is also another critical initiative which will help the Indian Railways monetise its land resources efficiently. Also, the vision to achieve 100 per cent paperless office administration and use of IT in hospital management will improve efficiency.

Freight capacity

The last but important step, is the setting up of three railway lines in the coal-rich belt of Jharkhand and Odisha. By implementing these projects it is expected to bring in an incremental freight traffic of about 100 million tonnes, or about 10 per cent of total freight carried by the Indian Railways. This initiative will also provide the much-awaited coal supplies for many of the power plants.

In this context, one of the most important projects for the Indian Railways is the development of dedicated freight corridors (DFCs). They are vital for expanding the freight carrying capacity of the Indian Railways network and improving the operating ratio.

The Railways Minister thus has tried his best to revive the ailing organisation and yet meet the expectations of people.