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Saturday, 27 February 2016


The first thing that analysts started discussing immediately after the railway budget presentation was its operating ratio. 93.8 % in the current fiscal, for every 100 rupees earned by railways, Rs.94 is spent, chanted one of our esteemed analysts. Continuing with her quantitative analysis, she exclaimed, “Passenger and freight revenue targets have not been met, capital expenditure has been increased for the next fiscal that to 20% YOY”. I think she forget that for a change she has been asked to analyze Indian Railways, and not a mid cap company. Indian railways, a $ 25 bn industry catering to 8 bn people every year requires a separate individual annual budget, being the largest rail network in the world. 

Personally, I don’t remember any of the previous budgets bang on targets. So this budget is also following the normal trend year after year. But still a number of industry experts are optimistic for railways for the medium and long term. WHY? Qualitative aspects have been inculcated which will fructify only in the long run which number crunching analysts are unable to comprehend. And most of the industry veterans are happy with the fast decision making process over the last one year. 

Starting with the major thrust areas, common man’s needs were highlighted through initiatives such as Antyodaya Express (long distance fully unreserved), Deen Dayalu coaches (for unreserved passengers, added to long distance trains), Hum safar (fully reserved third AC ), Tejas (high speed train with Wi-Fi), bar coded tickets, 30,000 bio toilet and Wi-Fi at 100 stations which will be extended to 400 stations in the next two years. And the amazing part is that number of these initiatives were suggestions on MyGov platform.   

Next stop was at direct freight corridors (three) which will be commissioned and freight basket will be expanded. Instead of taking easy way out by raising passenger and freight fares, other revenue models will be adopted by railway ministry. In simpler terms, railways is on the right track to regain its lost market share which right now stands at 30% through freight rationalization and improving operational efficiency, faster decision making and quicker implementation of railway projects.

Though there is a long list of fresh initiatives taken up by Indian railways such as first auto hub in Chennai, 400 stations to be developed through PPP, overhaul of parcel business to help e-com sector, innovation fund of Rs. 50 crore etc etc…. The major bone of contention is how all of this is going to be funded and capital outlay stands at Rs.1.2 lakh crore for the next fiscal.   

It’s true that optimistic assumptions are made in this budget which appear unrealistic to some. But optimism is the main ingredient of success. And this time there is human touch to the whole exercise which a lot of people fail to understand. I don’t know about others but I feel that I boarded the right train in 2014.

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