Ministry mulls boost to freight traffic, development through PPP.
With railway minister Mamata Banerjee quite clear on not wishing to raise passenger fares and freight rates, the coming Rail Budget is likely to focus on boosting freight traffic and sundry earnings to increase revenues on a sustainable basis. And, a thrust to develop infrastructural projects on a public-private partnership (PPP) basis.
With her West Bengal, where she's playing for the top stakes, slated to go for polls in 2011, Banerjee would be keen on presenting a populist budget. This is even though her passenger fare concessions of last July had further strained the railways' finances. Prime Minister Manmohan Singh had recently written to her and to Planning Commission deputy chairman Montek Singh Ahluwalia to find ways to increase railway revenues. Most passenger fares haven't been raised for seven years.
The PM asked Banerjee to consult Finance Minister Pranab Mukherjee on her preparations. Banerjee is regularly meeting Mukherjee in the evenings. She had also sought more than Rs 22,000 crore from the finance ministry for enhancing safety mechanisms. Mukherjee, though, is not likely to provide more than Rs 15,000 crore for the railways, as he himself faces high fiscal deficit and demands for more budgetary support from other ministries as well.
According to sources, Banerjee is being asked to focus on development of rail infrastructure, rather than riding on the populist front and announcing a further bonanza of new trains. An across-the-board raise in freight rates too is not likely to be announced in the budget, considering that inflation touched a 14-month high at 8.56 per cent in January. Wholesale food inflation has consistently been in double-digits for nearly a year.
A former Railway Board member said, “With inflation numbers being high, a hike in freight rates would further fuel a rise in the price of commodities. Besides, the ministry does not require parliamentary approval to increase freight rates. They can hike rates once the situation becomes favourable.”
With the economy reverting to its earlier growth, the emphasis would be on boosting freight traffic to increase revenues. Ministry sources indicate the railways wish to aim at double-digit growth in freight traffic in the coming financial year. The budget is also expected to provide outlines for revenue generation through commercial development of vacant railway land and commercial publicity.
Indian Railways is also lacking money to fund network and capacity expansion projects. Plans had also been outlined for developing world-class stations, budget hotels, multi-functional complexes, auto hubs and rolling stock production units, with private sector participation.
This budget, Banerjee's second in the UPA government, may outline several new PPP initiatives, as well as firming plans on pending projects. The minister has been interacting with industry bodies to encourage them to invest in projects, including those for new lines.
Since the Eleventh Plan period began in 2007, the railways were able to attract only Rs 395 crore in private investments as against the target of over Rs 60,000 crore for the five years to 2012. Banerjee's key task would be to make the PPP experiment work.
Many projects is expected to be announced for Bengal. Confided a source: "Over 60 proposals for developing projects in Bengal have been received; some of these would feature in the budget. A major chunk of investment is expected to be earmarked for the state." Some of these projects include extension of the metro rail from Dum Dum to Barasat, a rail hospital at Barasat, upgrade of Kharagpur as a world-class station, a multi-storied rail bazaar at Dankuni, building a Kendriya Vidyalaya at Uluberia and requests for new trains, line extensions and doubling works.
Progress of work on the dedicated freight corridors is likely to find mention in the budget document. Indications are funding options will be firmed up and work will be inititated on the eastern corridor in the next financial year. Vishwas Udgirkar, an executive director at PricewaterhouseCoopers said, "The former rail minister's focus was primarily on financial performance. Mamata Banerjee is laying emphasis on improving passenger services and passenger amenities on the network. More announcements in this tune can be expected.
