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Nirmala Sitharaman’s Budget dashes hopes of stimulus package for struggling Indian Railways

According to the Union Budget, the Indian Railways will need to spend 97.4 paise to earn every rupee in 2019-20, and 96.2 paise per rupee in 2020-21.

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New Delhi: Finance Minister Nirmala Sitharaman’s 2020-21 Union Budget has dashed hopes of a stimulus package for the crumbling economy of the Indian Railways.

The annual outlay this year, placed at Rs 1.61 lakh crore, is only marginally higher than the outlay of Rs 1.60 lakh crore last year.

The Rail Operating Ratio (OR) for 2019-20 has been pegged at 97.4 per cent, which indicates that the railways will spend 97.4 paise to earn every rupee during this fiscal. The OR for 2020-21 has been placed at 96.2 per cent.

But, as has been the case in past years, the actual OR figures have usually exceeded the budgetary estimates. In the 2018-19 Budget, OR had been pegged at 95 per cent, but the figure actually rose to 97.3 percent.

“At a time when passenger earnings are static and freight earnings are dipping, one had hoped that the Budget would provide a financial stimulus to the railways. I am disappointed that this has not happened,” former Railway Board member Subodh Jain told ThePrint.

Shiv Gopal Mishra, general secretary of the All India Railway Men Federation (AIRF), added: “We are disappointed with the budget. There is nothing in this either for the railways or for the employees.”

Also read: Should Indian Railways be privatised to prevent it from going the Air India way?

Less money for capital expenditure

The Gross Budgetary Support (GBS) component has also been artificially inflated. The allocation under this head has been placed at Rs 70,000 crore, but this amount is inclusive of the Rs 5000 crore allocated under the Rail Safety Fund and Rs 18,500 crore as the railways’ share from the Central Road Fund. Minus the allocation under these two heads, the GBS component works out to a mere Rs 46,500 crore, down from Rs 65,837 crore last year.

With a reduced GBS, there is less money available for the railways for capital expenditure. Also, unreasonable revenue targets appear to have been set. For instance, it is expected that the ministry will raise Rs 30,000 crore from Extra Budgetary Resources through the Indian Railways Finance Corporation (IRFC), Rs 28,000 crores through institutional finance, and Rs 25,292 crores through the public-private partnership mode.

A repeat of the past

For the most part, the finance minister’s speech concerning the railways sector read like a repeat of earlier budget announcements. For instance, she announced the plan to run Kisan Trains and operate refrigerated coaches for the benefit of farmers wanting to transport their produce.

The refrigerated coach plan has been announced and been experimented with on a few occasions in past years, but there have been few takers.

Sitharaman spoke about plans to set up solar power plants alongside rail tracks. This concept has been in the works for several years, and the railways have also floated three tenders to actualise the project.

Similarly, the much-talked-about idea of permitting private players to operate 100 trains on 150 routes was repeated by the finance minister in her speech. She elaborated on the Rs 18,600 crore plan to build the Bengaluru suburban train services, an idea that she had herself spoken about in last year’s Budget speech.

Also read: Why Tejas is ‘1st private train’ — Railways owns it, outside vendors provide food & clean it


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