Breaking away from a 92-year-old practice, the Railway Budget was merged with the Union Budget by Finance Minister Arun Jaitley on Wednesday.
The world's largest rail network has a higher capital expenditure budget in financial year 2018, pegged at Rs 1.31 lakh crore versus the Rs 1.21 lakh crore in this fiscal. The finance minister also laid a plan to list the Indian Railway Catering and Tourism Corp. (IRCTC) and other rail public sector units, which could help railways generate capital.
The Central government's gross budgetary support will be Rs 55,000 crore, while the remaining will be raised from internal accruals, including ticketing and the proposed stake sale.
The Budget revealed that the railways' own financials are not in a great shape. While the 7th Pay Commission has taken a massive toll on the salary and pension payouts made by India's largest employer, the operating ratio is expected to inch closer to 95 percent in the current financial year, according to the Union Budget. Revenue from passenger services will continue to be a drag on resources, with the under-recovery being pegged at Rs 30,000 crore, in this financial year.
The Rs 55,000-crore allocation made by the Centre has been welcomed by industry experts, who are also quick to warn that the Railways will have to pump up its project execution if it wants to make the most of the gross budgetary support.
For passenger safety, the finance minister announced a Rashtriya Rail Sanraksha Kosh with a corpus of Rs 1 lakh crore over a period of five years.
“This is overall a good budget and allocation for safety fund is a big positive,” said Abhaya Agarwal, Partner and PPP Leader, EY India. A view shared by the managing director of Kernex Microsystems, one of the railway systems safety players in the country.
The Rs 1 lakh crore safety fund corpus is a fantastic step.LV Raju, MD, Kernex Microsystems
The Fineprint
From the current fiscal, the earnings and expenditure and all other major financial figures of railways were incorporated in the general Budget.
The pain point for railways -- its passenger services -- is expected to continue this year as well. The finance minister expects under-recovery this year is likely to exceed Rs 30,000 crore.
Budget 2017 also emphasised on safety along broad-gauge lines. The finance minister said the government would work towards getting rid of unmanned-level crossings by 2020.
New lines of 3,500 kilometres would be commissioned in FY18 and at least 25 stations are expected to go for redevelopment. To make stations disabled friendly, about 500 stations would be provided with lifts and escalators.
The finance minister announced that about 7,000 stations would be powered by solar lighting in medium term.
For people to register their complaints, a single window interface, ‘Coach Mitra', has been provided.
The government would also fit railway all coaches with bio-toilets by 2019.
How It Used To Be
The Railway Budget used to be presented at least a day before the Union Budget, till last year, with the government trying to showcase its investment in the world's largest employer.
There was no reason to keep the railway budget separate. The Railways also was using the same consolidated fund.Abhaya Agarwal, Partner And PPP Leader, EY India
As per the Railways Budget that was presented in 2016-2017, the emphasis on was on rejuvenation and restructuring.
The railway ministry had focused on increasing non-fare revenues by monetising land along tracks, and generating revenues through advertising.
With a separate railway budget, introduction of new trains and services used to be the major chunk in the past, which the analysts believe was unnecessary.
Earlier, the Centre's contribution used to be lower, Raju said, but with the Railway Budget being merged with the general budget, the government increased its contribution to Rs 55,000 crore.
“This is is the best thing that has happened (for the railways),” Raju said.
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