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

Deepak Shenoy2 min read
Quick Facts
What is "Railway Budget Plans a 13,000 cr. Surplus, High Speed Trains. Incremental, Not PathBreaking." about?
What category is this article in?
Economy
Who wrote this article?
Deepak Shenoy, Capitalmind's research team.
When was this article published?
Published 8 July 2014.
How long does this article take to read?
2 min read
What topics does this article cover?
Budget
What does the "New Stuff" section say?
High speed rail between metros. But the budget is just Rs. 100 cr. So very unsure how this works. 9 sectors to have train speeds of 160 to 200 kmph. (Delhi to Agra/Chandigarh/Kanpur, Mumbai to Goa/Ahmedabad, Hyderabad-Chennai, Nagpur and Nagpur to Bilaspur) 58 new trains, 11 trains extended. Specially packaged trains for Pilgrim circuits New Ticket reservation system, move to paperless offices in 5 years. Real time tracking of trains, Navigation information system Railway connection to new and upcoming ports, through PPP. Now this makes sense, the port operator will pay.
What does the "Changes to Trains and Stations" section say?
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.
What does the "Outsourcing and Private Party Participation" section say?
Cleaning: Housekeeping to be contracted out at 50 major stations Food Courts in Stations Logistics support to e-commerce companies by segregating pick up centers. Bulk of future projects through Pulbic Private Participation (PPP) Cabinet approval required for FDI in Railways, has been asked for. E-Procurement will be purely online, including wagon requests and status of projects.
What does the "Where’s the money going to come from?" section say?
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.
What does the "Positive For?" section say?
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.

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.

Tagged:Budget