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RAILWAY BUDGET
2013 - 2014
While on one hand, the Railway Minister refrained from hiking passenger fares further, especially after an
across-the-board fare hike last month, on the other hand the Minister has adopted the Fuel Adjustment
Component, which will be dynamic in nature and may move in either direction after revision of fuel price
twice a year. This will result in freight rates going up from April 1. Moreover, various supplementary charges
on tickets and reservation fee, cancellation charges, tatkal rates etc were raised, which will make travelling
in rail costlier. The proposal for setting up of Railway Tariff Regulatory Authority has also been formulated
and was at the stage of inter-ministerial consultations.
Internal revenue generation of the Railways has fallen short of target because of increase in diesel prices and
slowdown in freight. But, the positive lining has been that the Railways did not seek any supplementary grants
and had been able to repay the loan sought in addition to gross Budgetary support before the scheduled time.
There were promises to reduce expenditure but that did not stop the Minister from announcing measures to
upgrade safety, introducing 67 new express trains, besides increasing the frequency of sub-urban train
services, carrying forward East-West Metro corridor project in Kolkata, laying 470 km of new line in 2013-14,
575 km of gauge conversion, introducing first AC EMU in Mumbai, setting up new manufacturing and
maintenance units, besides other announcements. Moreover, the Operating Ratio, which is pegged to go below
90% this year and the next, is a good sign.
A lot of passenger-friendly measures were taken to improve the overall service of the railways. Next-Gen e-
ticketing system, e-ticketing through mobile phones, extended internet ticketing hours, free Wi-Fi facilities in
some trains, mechanized laundries, contacting on-board staff through SMS, phone, e-mail for coach
cleanliness, escalators and lifts at major stations, ISO certified state-of-the-art base kitchen in railway
premises, extension of bio-toilets in trains, extension of on-board housekeeping scheme are among the various
proposals put forth by the Railway Minister which will bring a smile on the face of the passengers.
Now that the Railway Budget is over, the focus will definitely shift towards the Union Budget, due to be
presented on February 28. It remains to be seen whether the Government goes ahead with the reforms
measures initiated late last year.
Financial Performance
Budget Estimates
Railways completed laying 709 km and 727 km of new line in 2010-11 and 2011-12, respectively.
However, during 2012-13, emphasis was laid on capacity enhancement work like laying double line,
improving traffic facilities etc. The target of laying 700 km of new line in the current year had to be
scaled down to 470 km due to inadequate resources.
The target of 800 km of gauge conversion fixed for 2012-13 has also been scaled down to 575 km.
Railways met the target of new line and electrification but fell short of the targets for laying double
line and gauge conversion, achieving only 2,758 km and 5,321 km respectively.
Land acquisition for nearly 2,800 km of the Eastern and Western Freight Corridors is almost complete.
The number of passenger trains moved up from 8,897 in 2001-02 to 12,335 in 2011-12.
Key Announcements
Elimination of 10,797 level crossings during the 12th Plan and no addition of level crossings.
Introduction of Train Protection Warning System on Automatic Signalling Systems.
Introduction of 160/200 kmph Self-Propelled Accident Relief Trains.
Internet ticketing from 0030 hours to 2330 hours and e-ticketing through mobile phones. Next-Gen e-
ticketing system to be rolled out, which will be capable of handling 7,200 tickets per minute against
2,000 now and 1.20 lakh users simultaneously against 40,000 now. Free Wi-Fi service in several trains.
470 km new lines, 750 km doubling, 575 km gauge conversion and 1200 km electrification targeted in
2013-14.
There was no hike in passenger fare this time as already there has been an across-the-board fare hike
in January this year. However, supplementary charges for super fast trains, reservation fees, clerkage
charges, cancellation charges and tatkal charges were raised marginally.
Fuel Adjustment Component (FAC) linked revision for freight tariff to be implemented from April 1,
2013.
The targets for the Railways for the 12th Five Year Plan are:
The Planning Commission has pegged the Railways’ 12th Plan at Rs 5.19 lakh crore with a Gross
Budgetary Support of Rs 1.94 lakh crore, internal resources of Rs 1.05 lakh crore and market borrowing
of Rs 1.20 lakh crore, with another Rs. 1 lakh crore expected to be raised through Public Private
Partnership (PPP) route.
In order to improve safety standards, the Government proposes to initiate an exercise of making
Corporate Safety Plan for a ten-year period (2014-24).
For the first time, 347 ongoing projects have been identified as priority projects and provided
committed funding. The Government intends to ensure required funding of these projects during the
12th Plan to complete them within specified time.
(For details refer Annexure - 2)
A target of Rs. 1 lakh crore has been set to attract investments through PPP route during the 12th Plan.
A target of Rs 1,000 crore has been proposed to be fixed for both Rail Land Development Authority and
IR Station Development Corporation in 2013-14.
An investment of up to Rs. 9,000 crore is likely to be made under these projects, including Rs. 3,800
crore for port connectivity projects, Rs. 4,000 crore for coal mine connectivity and Rs. 800 crore for
iron ore mines connectivity improvements.
To meet the rising demand, reduce dependency on imports and to generate employment opportunities, new
manufacturing/maintenance facilities were proposed to be set up.
New Forged Wheel Factory at Rae Bareli, for which a Memorandum of Understanding has been signed
with Rashtriya Ispat Nigam Limited (RINL).
Greenfield Mainline Electrical Multiple Units (MEMU) manufacturing facility at Bhilwara, Rajasthan in
collaboration with the State Government and BHEL.
Coach manufacturing unit in Sonepat district, Haryana, in collaboration with the State Government.
Midlife Rehabilitation (MLR) Workshop at Kurnool, Andhra Pradesh in tie-up with the State
Government.
Conversion of Bikaner and Pratapgarh workshop to undertake POH of BG wagons.
Workshop for repair and rehabilitation of motorised bogies at Misrod, Madhya Pradesh.
New wagon maintenance workshop in Kalahandi district, Odisha.
Modern signalling equipment facility in Chandigarh through PPP route.
Freight Corridors
Land acquisition for nearly 2,800 km of Eastern and Western Freight Corridors is near completion.
The first major civil construction contract on the 343 km Kanpur-Khurja section of the Eastern Corridor
has already been awarded. Construction contract to cover up to 1,500 km on the two corridors would
be awarded by the end of FY14 and the work has been started.
Preliminary Engineering-cum-Traffic Studies (PETS) have been taken up on four future Dedicated
Freight Corridors.
In line with the recommendations by Kakodkar and Sam Pitroda Committee, the improvement of safety
measures have become one of the major thrust area of the Railway Ministry. Accordingly, the Railway Minister
proposed certain steps to improve the safety standard, some of which are similar to the ones announced in
the previous Railway Budget (FY12-13). The key safety measures announced are:
In order to mitigate the risk of accidents, it was proposed to eliminate 10,797 level crossings during
the 12th Five Year Plan and not adding any level crossing in future.
To ensure enhanced safety for railway operations and increase the track capacity, the Ministry has
decided to improve the signalling system.
Introduction of Train Protection Warning System (TPWS) on automatic signalling systems. The system
ensures automatic application of brakes whenever a driver over-shoots a signal, thereby eliminating
chances of collision of trains.
The indigenously developed Train Collision Avoidance System (TCAS) has been proposed to be put in
more extensive ways, following the succession of initial testing.
Upgradation of track structure using 60 kg rails, 260 metre long welded rail-panels and improved flash
butt welding technology.
Induction of Self Propelled Accident Relief Trains (SPART) with speed potential of 160/200 kmph on a
trial basis with a view of putting a fast and reliable disaster management system in place.
Rehabilitation of 17 bridges, identified as distressed, to be completed over the next one year.
Improvement of fire fighting measures.
Some of the other important announcements during the Railway Budget are listed below:
An educational tourist train called ‘Azadi Express’ introduced to enable youths travel to important
places connected with the freedom movement.
In view of disposing of scrap, the Railway Budget introduced a special drive during the year to take up
disposal of scrap lying in stores, depots, workshops, along the tracks and at construction sites. A target
of Rs 4,500 crore has been set for 2013-14.
Railways took the initiative of protecting the environment and promoting sustainable development and
use of energy-efficient technologies.
To motivate students undertake research on Indian Railway related issues, it was proposed to introduce
5 fellowships in national universities. The fellowship will carry an appropriate stipend also.
Complimentary passes for Olympic medalist, Arjuna awardees, sportspersons, brave and valiant
soldiers, the parents of posthumous unmarried awardees of Maha Vir Chakra, Vir Chakra, Kirti Chakra,
Shaurya Chakra, President’s Police Medal for Gallantry and Police Medal for Gallantry
On the tourism front, mountain railways of the country are the World Heritage Sites, placing India in
an exclusive club of nations that include only Switzerland and Austria. Necessary measures will be
taken to preserve them.
Focused Areas:
In the Railway Budget, the Government has tried to reduce capital investments and other
expenditure instead of hiking passenger fares. In order to compensate the high fuel bill, the
Government proposed to introduce Fuel Adjustment Component and passenger amenities cess.
Steps were taken to improve safety of women and other individuals and bringing about
modernisation in Railways.
Equity Market
•The benchmark indices, the 30-share S&P BSE Sensex, and the 50-unit CNX
Nifty, both hit their lowest closing levels in thirteen weeks.
• The Government proposed a 5% hike in freight rate, which is likely to
increase burden on the corporate earnings.
•No benefits were announced for the railway wagon makers, which dampened
sentiments further.
Debt Market
• The benchmark 10-year bond yield closed 2 basis points (bps) higher at 7.82%
after easing earlier to 7.78%.
• The five-year OIS rate fell 5 bps to 7.18%, the lowest since January 30.
• The Railway Budget reflected contained spending, which is a sign of the
Government’s fiscal discipline.
Commodity Market
• The implementation of Fuel Adjustment Component (FAC) - linked revision in
freight tariff is likely to raise the price of commodities including coal, cement
and steel, which use Railways for transportation purposes.
• The announcements were overall positive for sectors like steel, cement,
metal products, containers, electrical equipment etc. because higher outlays
will lead to an increase in demand for these industries.
Currency Market
• There was no direct impact of the Railway Budget on the currency market.
However, the sell-off in equity markets due to Railway Budget and global cues
hit the domestic currency.
• The partially convertible rupee closed at 54.09/10 per dollar against its
previous close of 53.87/88.
1. Titagarh Wagons
2. BEML
No major announcement regarding wagons. Wagons 3. Texmaco
4. Container Corporation of
India
1. Proposal to take up 22 projects of new lines and one gauge 1. Kalindee Rail
conversion project on socio-economic consideration. 2. Texmaco
2. A target to complete 470 km of new lines has been set for 3. Rail & Engg Ltd
2013-14. New Line 4. IVRCL
3. Target to convert 575 km of MG/NG lines to broad gauge Infrastructure 5. NCC
during 2013-14. 6. Tantia Construction
4. Target for Doubling has been increased to 750 km for 2013- 7. Era Infra
14. 8. C&C Construction
1. Tantia Construction
2. Madhucon
1. Upgrading 60 stations as Adarsh stations in addition to 980 3. Era Infra
Construction
already selected. 4. Gammon
5. Kalindee Rail
6. C&C Construction.
1. MIC Electronics
2.Nitin Fire
3. Hind Rectifiers
1. 67 new express trains and 26 new passenger trains. New Trains
4. Kernex Micro
5.Integra Hindustan.
6. TRIL
Source: ICRA Online Research; * The list of companies is indicative not exhaustive
Expenditures
i Ordinary Working Expenditures 84,400.00 84,400.00 96,500.00
ii Appropriation to:
Depreciation Reserve Fund 9,500.00 7,000.00 7,500.00
Pension Fund 18,500.00 20,000.00 22,000.00
iii Other Misc. expenditure 1,000.82 993.32 1,170.00
iv Open Line Works- Revenue 60.00 60.00 60.00
Source: Explanatory Memorandum: Railway Budget - 2013 – 14; ICRA Online Research
Overview of Financial Position of the Indian Railways (in Rs. Crore at current prices)
Annexure – 3
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