Railway Budget 2013-14 - Eastern Financiers

The first Railway Budget in 17 years by a congress minister, Mr. Pawan Kumar Bansal who was the fourth railway minister in less than last 12 months following Mr. Trivedi, Mukul Roy and Mr. CP Joshi tabled his maiden budget that ducked the opportunity of a further round of passenger fare hikes as the country gears up for national election due next year—despite of railways suffering huge losses. The Budget once again emphasized on safety norms including consolidation, Passanger Amenities and fiscal discipline being other thrust areas for FY 2013-14.

Mr. Bansal had announced fare hike—a month before the budget in January by 21% across the board that aims to mop-up an additional revenue of Rs. 6600 crores. He said that, he does not intend to pass on the impact of deregulation of diesel price for now and the Railways will absorb a burden of Rs. 850 crore on account of this. However, the subsequent hike in diesel price and electricity charges put an additional burden of Rs 3,300 crore on the railways which is projected to see a loss of Rs 24,600 crore in the current financial year, up from Rs 22,500 crore in 2011-12 in passenger traffic segment.

Minister said the target of 700 km of new lines in the current year (2012-13) had to be scaled down to 470 km due to inadequate resources. In 2010-11 and 2011-12, Railways completed 709 km and 727 km respectively of new lines. The target of 800 km for gauge conversion fixed for 2012-13 has also been scaled down to 575 km.

Mr. Bansal however, announced hike in various charges on tickets along with freight tariff of less than 5%. In a bid to offset the impact of recent diesel price hike on railway's revenues, Mr. P.K. Bansal adopted a dynamic fuel adjustment component that will be introduced on freight rates from April 1, which will result in less than 5% increase in rates. Marginal increase in supplementary charge for superfast trains, reservation fee, clerkage charge, cancellation charge and tatkal charge has been proposed. In order to simplify the fee structure, the concept of enhanced reservation fee has been abolished.

Presenting the 2013-14 Railway Budget, Mr. Bansal announced introduction of as many as 67 new express trains and 26 passenger trains this year. He also said that five Mainline Electrical Multiple Units (MEMUs) along with 8 DEMUs shall be introduced this year. Besides, he proposed extension of as many as 57 trains and increasing the frequency of 24 trains.

Mr. Minister has laid down the Annual Plan outlay for the year 2013-14 at Rs. 63,363 crore which is the highest ever plan investment. The plan outlay would be financed through:

- Gross Budgetary Support of Rs. 26000 crore
- Railway Safety Fund of Rs. 2000 crore
- Internal Resources of Rs. 14260 crore, and
- Extra Budgetary Resources of Rs. 21103 crore, which imbibes marker borrowing of Rs. 15103 crore and PPP of Rs. 6000 crores.

The Budget as anticipated was more of an unbalanced statement rather than a reformatory guidance to the sagging Indian Railway's that has been tormenting from years of low investment and political meddling. However, the silver lining in the Budget was the Operating ratio that is expected to improve to 87.8% in 2013-14 from 88.8% in the current fiscal.

Source : Equity Bulls

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