Union finance minister Nirmala Sitharaman on Saturday announced several big-ticket projects for Indian Railways, including several passenger and Tejas-type trains, solar power plants along railway tracks, among others with a focus on private participation.
In her Budget 2020 speech, Nirmala Sitharamam said the Indian Railways will set up a “Kisan Rail” through public private partnership (PPP) with refrigerated coaches for transportation of perishable goods to assist farmers.
“To build a seamless national cold supply chain for perishables, inclusive of milk, meat and fish, the Indian Railways will set up a “Kisan Rail” – through PPP arrangements. There shall be refrigerated coaches in express and freight trains as well,” Sitharaman said.
Reefers, or refrigerated containers, facilitate the movement of cargo that requires a strict temperature-controlled environment. At present, the railways’ subsidiary CONCOR provides reefer services.
Cold chains as a business area involves providing transportation to perishable products from source to end-user while maintaining a certain temperature along the route.
Absence of reefer container linkages and high and increasing power costs are proving to be a major hurdle in the growth of import and export of perishable cargo.
The slew of announcements made by Sitharaman also included the long-pending 148-km long Bengaluru suburban transport project at a cost of Rs 18,600 crore with fares on Metro model.
Sitharaman said the central government would provide 20% of equity and facilitate external assistance up to 60% of the project cost.
The finance minister also said more “Tejas type-trains” will be introduced to connect iconic tourist destinations across the country.
Tejas Express is India’s first private semi-high speed train to be fully run by its subsidiary Indian Railways Catering and Tourism Corporation (IRCTC).
High-speed train corridor between Mumbai to Ahmedabad would be completed by 2023, she said adding that the Bengaluru-Chennai train project would also be taken up.
“In carrying out its duty, the Indian Railways performs a service to the nation. Within 100 days of assumption of this government, it has commissioned 550 wi-fi facilities in as many stations… eliminated unmanned crossings. We aim to achieve the electrification of 27,000km of tracks. This will call for optimisation of costs. Railways has small operating surplus,” Sitharaman said.
More money
The finance minister proposed to provide Rs 1.70 lakh crore for the entire transport infrastructure sector in the financial year 2020-21.
Sitharaman had in her last budget proposed a capital expenditure of Rs 1,60,175.64 crore for the railways ministry surpassing the previous financial year’s Rs 1,48,528 crore. The finance minister had also said the network will require an investment of about Rs 50 lakh crore till 2030.
In terms of budget allocation for railways, the total receipt budget for FY 2020-21 is Rs 225,913 crore compared with Rs 216,675 in FY 2019-20.
A total of Rs 72,215.63 crore (budget estimate) has been allocated for the railways in the current budget a 6.1% increase over Rs 68,018.67 crore (budget estimate) the previous financial year. The allocation for FY 2019-20 was also revised to Rs 69,967.37 crore.
Looking at operating ratio
HT had reported on Friday that the national carrier is struggling to meet its freight and passenger earnings targets for the financial year 2019-20 amid dwindling finances.
“In view of a recent report that Indian Railways is possibly heading towards a revenue deficit for the current fiscal year, the ability to finance these required investments would be critically dependent on time-bound implementation of projects as well as enhancing the focus on asset utilisation and revenue generation through responsiveness to end-user requirements,” said Peeyush Naidu, partner, Deloitte India.
The 2019-20 railway budget pegged its freight and passenger targets for the fiscal year at Rs 1.43 trillion up by 12.2 % from Rs 1.27 trillion for the previous fiscal year while its passenger targets were pegged at Rs 56,000 crore up 9.7% from Rs 51, 066 crore.
According to the ministry of railways’ cumulative data till November 2019, the Indian Railways’ freight earnings stood at Rs 71,800 crore, 4.32% less than the same period last year and 19.72% lower than its target for the period.
Freight earnings have been affected due to fall in coal and cement movement amid a slowdown in the economy.
Passenger earnings for the national transporter till the same period stood at Rs 35,254.05 crore up by 3.99% from last year and 5.33% less than its target for the same period.
This also comes at a time when the national transporter is looking at an operating ratio of 95%. The railways is eyeing an operating ratio of 95% in the current fiscal, down from 97.3% in the financial year 2018-19.
Operating ratio measures expenses as a proportion of revenue or the amount spent on every rupee earned.
Chairman of the railway board VK Yadav on Wednesday said the railways is currently reeling under financial stress and would struggle to meet its operating ratio target this financial year, ahead of the union budget.
The Union Budget 2020 has pegged the railways’ operating ratio target at 96.2%.
