As Finance Minister Nirmala Sitharaman presented her first budget under the Modi government 2.0 on Friday, one sector that held a lot of attention was the Indian Railways. Earlier in September 2016, the Railway budget was merged with the general budget.
Since the past many years, the Indian Railways has been suffering from poor operating efficiency. The operating ratio remained above 95 per cent, reaching 98.4 per cent during 2017-18 during the last three years of the previous Modi government.
Here are the significant announcements on Indian Railways
- 657 kms of metro rail network has become operational across the country
- A comprehensive restructuring of National Highways Programme will be done, to ensure the creation of National Highways Grid of desirable capacity. The government envisions using rivers for cargo transport, it will also decongest roads and railways
- Railway infrastructure to need Rs 50 lakh cr till 2030
- Public private partnerships to be used to unleash faster development and the delivery of passenger freight services
- Schemes such as Bharat Mala, Sagarmala and UDAN are bridging the rural-urban divide and improving transport infrastructure
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While its revenue increased, Indian Railways also reported an increase in its expenses. In 2018-19, the staff expenses and allocation to pension fund were the biggest head under Railways' expenditures, amounting to 66 per cent of its estimated expenditure.
Of late, the Railway Ministry has tried to supplement its revenues by the way of asset monetisation. The move is expected to generate around Rs 25,000 crore for the organisation.
Indian Railways' expenditure on staff is extremely high and it kept increasing with every Pay Commission revision. Contrastingly, staff productivity is quite low, below countries like the United States, Russia, Japan, France and China, according to a report by PRS India. Streamlining the recruitment process and focus on training might be able to address this issue, the report shows.
High fuel prices have also weighed down Indian Railways' profit, as the organisation has been spending 16-19 per cent of its revenue expenditure on fuel.
The problem of dismal profits cannot be solved by merely increasing fares either as the upper-class fares are facing competition from budget airlines and AC bus services. A fare hike for the second class might lead to a loss in traffic as it is usually used by poorer sections of the society.
All points considered, it remains to be seen whether Nirmala Sitharaman has something in the Union Budget 2019 that can appease both the railway passengers and Indian Railways.
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