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Railway Budget 2020: Privatisation bid, bullet train dreams & stressed finances

BusinessToday.In     February 1, 2021

After a turbulent last year, Indian Railways is hoping for major sops in the Union Budget 2021-22 to help its ambitious plans. Like every other sector, the national transporter also felt the heat due to the coronavirus pandemic. While freight operations continued, passenger services had been restricted, completely or partially, for a significant portion of 2020. This pits the concerns over Indian Railways finances against projects like the high-speed railway network, dedicated freight corridor and modernisation, among others.

Ministry of Railways has sought Rs 75,000 crore gross budgetary support from Ministry of Finance in the upcoming Budget. This is against the total outlay of Rs 1.8 lakh crore laid out in the budget representation by the ministry.

Indian Railways has battled stressed finances for years now. The problem has been exacerbated this year on account of decline in earnings. Although freight earnings did come in, they were muted too as coal and cement movement fell in a slowing economy. All eyes would be on measures in the Budget speech to alleviate these concerns.

Capital outlay and budgetary allocation for Indian Railways has progressively grown over the last few years, but investment hasn't been encouraging. To remedy this, Ministry of Railways has turned to private players interested in participating in the government-monopolised railways sector.

"It is estimated that railway infrastructure would need an investment of Rs 50 lakh crore between 2018 and 2030. Given that the capital expenditure outlays of Railways are around Rs 1.5-1.6 lakh crore per annum, completing even all sanctioned projects would take decades. It is therefore proposed to use public-private partnership to unleash faster development and completion of tracks, rolling stock manufacturing and delivery of passenger freight services," Finance Minister Nirmala Sitharaman had said last year.

For the first time since its inception, Indian Railways has opened doors for private players to operate passenger trains. Railway Ministry is in the process of selecting private parties for operating 109 pairs of trains across 12 clusters along the railway network from 2023. This would entail an investment of Rs 30,000 crore. Policy measures to expedite this process as well as promote private participation are likely to feature in Budget 2021.

Indian Railways has been pushing for extensive modernisation for years. This has been the focus of Railways Budgets in the past and is once again expected to take centre stage this year. Introduction of modern trains with enhanced comfort features and passenger experience might be part of the allocation for railways in Budget 2021. Indian Railways is already in the process of awarding tender for 44 semi-high speed Vande Bharat trains sets.

Moreover, Railway Ministry had proposed Rs 35,965 crore for new line gauge conversion and doubling projects in the current financial year. Indian Railways is also planning to move to solar energy. Budget 2021 might give a fillip to this move towards greener energy.

One much-awaited announcement in this year's Union Budget would be on the bullet train project. In December last year, the draft National Rail Plan 2024 had proposed an 8,000 km high-speed rail network by 2051. This includes new corridors, including Varanasi-Patna, Amritsar-Jammu and Patna-Guwahati. So far, only one corridor has been approved between Mumbai and Ahmedabad, but it has run into land acquisition issues, especially in Maharashtra. Other corridors under consideration are Delhi-Varanasi via Ayodhya, Hyderabad-Bengaluru and Mumbai-Nagpur. In her last Budget speech, FM Sitharaman had said that the government will actively pursue the Mumbai-Ahmedabad bullet train project.

Indian Railways is also looking to monetise idle land parcel and other assets to generate revenue. Railway Ministry is one of the biggest government land owners in the country, and has been identifying parcels for commercial development and infrastructure creation. Last Budget had called for asset monetisation for efficient resource use; this year it could be taken further considering the pressing need for revenue after a distressing year.


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