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Economy Feb 19, 2013

Rail Budget 2013: ‘Railways need Rs 120,000 cr, better PPP format’

By Firstbiz Staff

By Sachin Bhanushali, Gateway Rail Freight

Indian Railways have been experiencing a roller coaster ride during the last few years. During the recent past the operating ratio has deteriorated from 78.7 percent in 2006-07 to 95 percent in 2011-12. The staff cost has become a major hurdle in IR's progress as this has put a big strain on it's finances.

Indian Railways need better infrastructure. Reuters

Indian Railways need better infrastructure. Reuters

The freight loading target of 1025 MT for FY13 is likely to be achieved. However, the resources required for modernisation and expansion of passenger and freight terminals and its network are not available. As mentioned in Vision 2020 document as well the Budget papers, there is a need to mobilise over Rs 120,000 crore during the current Plan period. Therefore, private participation in resource mobilisation will have to play a key role in IR's progress map.

However, Indian Railways have not shown an investor friendly attitude in its PPP initiatives. It's major initiative - the CTO (container train operators) sector, has suffered due to both tariff and non-tariff actions. As a result there is a complete lack of enthusiasm among investors and lenders in putting their money in rail related projects. It's other initiatives such as Private Freight Terminals and Special Freight Train Operators have failed in attracting private capital in a big way.

Indian Railways should restore the investors' and entrepreneurs' confidence by undoing some of its recent actions -- such as the 16-31 percent increase in rail haulage charges. The ministry will have to use Railway Budget to address IR's core issues such as mobilising resources, controlling costs and offering competitive freight structure with an environment friendly advantage to increase its share in the freight market.

This article by Sachin Bhanushali first appeared on moneycontrol.com

by Firstbiz Staff

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