Railway Budget 2014: Fiscal stability, infrastructure development on cards

Development of railways have always been on the cards for the Narendra Modi Government who has been consistently pitching for upliftment of railway infrastructure to fuel growth. The Indian railway system, which is the third largest rail network in the world is currently facing a loss of nearly Rs 900 crore per month and needs immediate attention. The Modi Government's pre-budget decision to hike passenger fare by 14% may be a bitter medicine but will give Indian railways additional revenue of Rs 8000 crore annually.

As Railway Minister DV Sadananda Gowda who is slated to present it's maiden Budget in Lok Sabha tomorrow, fiscal stability in the railways and infrastructure development through public-private partnership is the top priority. The sudden hike in passenger fare was severely criticised by Opposition but Finance Minister Arun Jaitley justified the hike by blaming the last UPA Government and said that if fare was not hiked it could have led to hault in operations.

"Current rail, freight rate hike is of the UPA's legacy. Railways' loss on passenger fare was by Rs 30,000 crore in February. Railways' mounting losses could have led to halt in operation," said Finance Minister Arun Jaitley a day ahead of announcement of railway budget.

Passenger safety, technological upgradation in the offing

Indian Railways, despite being one of world's largest carriers, faces major financial crunch and needs immediate attention. This increase in passenger fare by 14.2 per cent and freight charges by 6.5 per cent could be seen as a part of series reforms in the cash-strapped Indian Railways, which is reportedly facing a loss of nearly Rs 900 crore per month.

Railways' loss on passenger fare amounts to Rs 30,000 crore in Feb

But, people are ready to bear the pain and pay higher prices while travelling in the national carrier which has not seen any substantial fare hike in the last decade. Over 70 train accidents took place in the last decade claiming over 1175 lives and lack of technological upgradation has been one of the prime concerns. Moreover, poor services have been another major concern and that is why people are ready to pay more for better and safer journeys.

Privatization of railways

The recent hike in fare was justified by the Government as a measure to revive the ailing economy but such increase in fares on a regular basis will deeply effect the common man and raise public anger. At a time when the Indian railways is suffering a staggering loss of Rs 900 crore per month, privatization is a step forward and can only lead the railways to a positive track.

Not to forget the 10 per cent of its capital which railways spend in hospitals and schools of its employees, including the private parties will also help in easing some burden from the Government's shoulders. Moreover, commercialisation of Railways' land for developing shopping complexes and utilising the interiors and exteriors of rail coaches for advertisements would also help the railways to generate some extra revenue. In yet another move to boost railway's revenue receipts, Gowda, in his maiden budget, might also to announce 100 per cent FDI in areas such as high-speed train systems and dedicated freight lines and a more investor-friendly PPP model.

The Government's burden can also be reduced by entrusting the responsibility of maintenance and development of railway platforms to the Private firms. This would not only help in improving the condition of platforms but will also take away the financial burden from the Government. However, Union Home Ministry has raised objections against any such proposal, saying that it might affect the security of such a large transportation network. Indian railways is one of the critical sector for driving growth and contributes to almost over a per cent of GDP. Union Railway Minister DV Sadananda Gowda is also expected to encourage use of innovative measures to perk up revenue of the ailing sector.