Railway Budget Plans a 13,000 cr. Surplus, High Speed Trains. Incremental, Not PathBreaking.

3 comments Written on July 8th, 2014 by
Categories: Budget2014

The Railway Budget has been provided. Here’s a quick list (with press release links) for the major announcements:

New Stuff

Changes to Trains and Stations

  • CCTV on trains, platforms, for security and cleanliness
  • Bio-Toilets so that waste is not directly discarded on track. (Thank goodness)
  • Food courts in stations (finally)
  • Cleanliness budget up 40%
  • Wifi in A and A1 category trains, workstations in trains.
  • Logistics support to e-commerce companies by segregating pick up centers.
  • Lifts and Escalators in stations, through PPP route. I don’t know how this works - do you pay to use the lift? Why PPP if the private player sees no revenue?
  • Battery operated carts to transport the old and invalid.

Outsourcing and Private Party Participation

Where’s the money going to come from?

  • They’ll earn 1.64 trillion (lakh crore) from ops. (Link)
  • They’ll spend 1.49 trillion (lakh crore) (Link)
  • Revision in prices based on the cost of fuel.
  • They’ll borrow around 11,800 cr. which for their revenue isn’t that much. Plus, they might be able to raise it at lower costs through tax free bonds with IRFC.

Positive For?

  • BEML which makes coaches.
  • Many of the rail companies like Kalindee Rail, Texmaco Rail etc. but it looks like expectations were even higher!
  • Based on the implementation, will be good for freight. Which probably means not so great for the likes of Ashok Leyland and Tata Motors which make trucks.
  • All these stocks are down big time, some limit down. However, the impact isn’t negative at all, and FDI for Railways will most likely come through after the budget.
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3 comments “Railway Budget Plans a 13,000 cr. Surplus, High Speed Trains. Incremental, Not PathBreaking.”

I was surprised about the 100 cr allocation to high-speed rail. Gowda mentioned that the Railways would fund the study for high-speed rail. Which basically means that ‘initiative’ is pure hog-wash.

Still unclear how the capital plans for the next 5-10 years will be financed using annual surplus of 13,000 crore only? If the answer is PPP, then the public will have to pay or else the Railways have to pay. if Rlys have to pay then the surplus will not be so high. Gowda seems to have borrowed from the mamta banerjee school of thought…qualitative excellence at the expense of quantitative detail.

Thanks for the brief! I also curious as to how they are going to fund the high-speed rail project with just Rs 100 cr.

Raj,what do you mean by qualitative excellence at the expense of quantitative detail?