Eyeing wider revenue base, railways spare common man

New Delhi, Feb 25: The Railway Budget 2016-17 seeks to boost revenues from freight carriage, reduce outgo, make investments that will fetch better returns, and monetise assets.

Presenting his proposals to Parliament on Thursday, Railway Minister Suresh Prabhu said the targeted operating ratio is 92 percent and sought to restrict the growth of ordinary working expenses (OWE) by 11.6 percent.

Railways spare common man

Trying to tap revenues elsewhere in Railways' operations, Prabhu left the passenger fares untouched.

He said the operating ratio for the current year would be around 90 percent and the increase in the next year's ratio is mainly due to salary and pension outgo following the 7th Pay Commission recommendations.

For funding capex (capital expenditure), the focus is on tapping different sources, including public-private-partnerships (PPP) and floating of special purpose vehicles (SPVs).

Prabhu said the gross traffic receipts have been kept at Rs.1,84,820 crore.

The investment plan size is put at Rs.1,21,000 crore for 2016-17.

The passenger revenue growth is pegged at 12.4 percent and the earnings target is fixed at Rs.51,012 crore.

Prabhu said he targeted to earn a revenue of about Rs.1,17,933 crore by carrying 50 million tonnes of freight.

He said steps are being taken to improve the infrastructure to carry 25-tonne axle load and also set up a rail auto hub in Chennai to capture the car transport business.

The Railways would develop rail-side logistics parks, warehouses under PPP mode to attract more freight traffic, and also bring efficiency, the minister said.

He proposed three solution sets for reversing Railways' declining freight share -- expanding the freight basket, rationalising tariff structure, and building terminal capacity.

Network capacity limitations do not allow for running of time-tabled freight trains but from this year time-tabled freight container, parcel and special commodity trains will be started on a pilot basis.

According to Prabhu, the container sector would be opened to all traffic, barring coal and specified mineral ores, and part-loads would be permitted during the non-peak season.

All existing terminals/sheds would be granted access to container traffic, where considered feasible.

He said the current tariff structure of the Indian Railways has led to out-pricing of freight services.

A review of tariff policy will be undertaken to evolve a competitive rate structure vis-a-vis other modes, permit multi-point loading/unloading and apply differentiated tariffs to increase utilisation of alternate routes.

He said the possibility of signing long-term tariff contracts with key freight customers using pre-determined price escalation principles will be explored which would provide predictability of revenues to the Indian Railways and of costs to customers.

Prabhu also proposed development of freight corridors between Delhi-Chennai (north-south), Kharagpur-Mumbai (east-west) and Kharagpur-Vjayawada on the east coast.

According to him, the three projects will be on high priority to ensure structuring, award and implementation in a time-bound fashion.

Other coaching and sundries are projected at Rs.6,185 crore and Rs.9,590 crore respectively.

Under Ordinary Working Expenses (OWE), apart from providing for normal growth, provisions required for the implementation of the 7th Pay Commission recommendations have been made.

For the next fiscal Rs.1,23,560 crore is proposed for OWE from the current revenues.

The pension outgo has been budgeted at Rs.45,500 crore in 2016-17 following the 7th Pay Commission recommendation.

On increasing the non-tariff revenue, Prabhu said the Railways can lease out its land for horticulture purposes or for setting up of solar power plants.

Prabhu also said the Railways can also monetise its huge data base.


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