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(Article) CSM - May 2013: Railway Budget 2013-14: On Recovery Path

Railway Budget 2013-14: On Recovery Path

Union Railway Minister Pawan Kumar Bansal presented the Union Railway Budget for 2013-14 in Lok Sabha on 26 February 2013. Except for the fact that it was after 17 long years that a Congress minister got to present the Railway budget, there was nothing particularly unique about Pawan Kumar Bansal’s maiden essay. Having raised fares a little over a month ago, he was able to spare passengers this time, but he has put in place a dynamic tariff mechanism for freight to take care of future increases in the price of fuel. This is likely to result in a 5 per cent rise in freight rates from April 1, with the promise of a half-yearly fuel price adjustment system to provide for the regular hike in diesel prices announced earlier by the government.

The incremental loading of 40 million tonnes projected for 2013- 14 vis-à-vis the BE of 2012-13 is far below the projections arising out of the Vision 2020 document of nearly 100 million tonnes. This is an indication of how far the Railways have fallen behind their growth plans projected hardly three years ago. Food for thought at the highest level whether the Railways should lead or lag behind the overall economy’s growth rate. In this context, the Minster’s announcement that contracts covering 1500 km of the Dedicated Freight Corridors on the Eastern and Western sector will be awarded during 2013-14 is welcome news as the completion and commissioning of these two corridors is essential before the effects of the next Pay Commission deal a fatal blow to Railway finances around 2017-18.

The Minister’s announcement for Fuel Adjustment Component (FAC) linked revision of freight tariff, a proposal mooted by his predecessor, with effect from April 1, 2013 is welcome. His reluctance to bite the FAC bullet in the case of passenger fares is understandable, considering that a revision has been done recently. But hopefully this will not once again lead to a long hiatus of passenger fare revision citing various reasons. It is necessary to institutionalise the revision of freight tariff and fares through the proposed Rail Tariff Regulatory Authority. However, it is doubtful whether a final decision in this regard will be taken during the balance tenure of this government.

The January 22 passenger fare revision was meant to fetch the Indian Railways Rs. 6,600 crore in additional revenue in a full year; but the recent increase in diesel prices could cost the Railways Rs. 3,300 crore in its fuel bill. The logic of dynamic tariffs, even if only for freight, can therefore hardly be faulted. On the passenger fare front, though the basic fare has not increased, the minister has raised the reservation, tatkal , supplementary, cancellation and super fast train charges marginally. With the focus on making the Railways “financially sustainable,” Mr. Bansal is hoping to end 2013-14 with a balance of Rs. 12,506 crore in Railway funds. It is creditable that an operating ratio of 88.8 per cent is being achieved during the current year 2012-13, even after fully repaying the loan of Rs 3,000 crore along with interest that was taken from the Ministry of Finance, and after setting aside Rs. 9500 crore for Depreciation Reserve Fund (DRF). Against this, the budget estimate for 2013-14 projects an Operating Ratio (OR) of 87.8 per cent with a DRF appropriation of only Rs.7500 crore. This once again highlights the need for a more reliable index of financial performance rather than the present OR, which can be tweaked to suit by appropriately adjusting the DRF allocation. It is hoped that the proposed revamping of the accounting system will look into this aspect.

Railway Budget 2013-14 at a Glance:

  • The Thrust of this year Railway Budget was on Safety, Consolidation, Passenger Amenities and Fiscal Discipline.
  • Deployment of new generation energy efficient electric locomotives and EMUs.
  • Five Percent Increase in freight to push Inflation.
  • Elimination of 10797 level crossings during the 12th Plan and no addition of new LCs to the IR system henceforth.
  • Introduction of Train Protection Warning System on Automatic Signalling Systems.
  • Rigorous trials of the indigenously developed Train Collision Avoidance System.
  • Four companies of women RPF personnel set up and another 8 to be set up to strengthen the security of rail passengers, especially women passengers
  • Recruitment to RPF with 10% vacancies reserved for women.
  • No increase in passenger fares
  • 500-km new lines to be completed in 2013-14
  • Diesel price hike added 3300 crore rupees to fuel bill of Railways
  • Railways hopes to end 2013- 14 with a balance of 12506 crore rupees
  • Concessional fare for sportspersons
  • Five fellowships to be announced to motivate students
  • Seek to fill 1.52 lakh vacancies in railways this year. 47000 vacancies for weaker sections and physically challenged to be filled up soon
  • Target of 4000 crore rupees for railway production units in 2014
  • Induction of e-ticketing through mobile phones, SMS alerts to passengers
  • Free wi-fi facilities in select trains. 60 more ‘adarsh’ stations
  • The number of passenger trains has increased from 8000 in 2001 to over 12000 in 2012 - yet losses continue to mount. It is estimated to be Rs. 24000 crore in 2012-13
  • Proposal for setting up of Railway Tariff Regulatory Authority formulated and at inter-ministerial consultation stage.
  • Supplementary charges for super fast trains, reservation fee, clerkage charge, cancellation charge and tatkal charge marginally increased.
  • Complimentary card passes to Olympic medalist and Dronacharya Awardees for Rajdhani Shatabdi Trains.
  • Announcement Facility and Electronic display boards in train.

Railway Budget 2013-14:

New Plans and Schemes Union Railway Minister Pawan Kumar Bansal presented the Union Railway Budget for 2013-14 in Lok Sabha on 26 February 2013. Some of the New Plans and Schemes proposed in Railway Budget 2013- 14 are as under:

  • Proposal for setting up of Railway Tariff Regulatory Authority formulated and at inter-ministerial consultation stage.
  • To provide a memorable experience to the visitors especially the children, a revamp plan will be rolled out for National Railway Museum in 2013-14.
  • To create a corpus for meeting IR’s committed liabilities for debt servicing of JICA and World Bank loans taken for the DFC Project, it is proposed to set up a new Debt Service Fund.
  • In order to meet the growing demand, 72 additional services in Mumbai and 18 in Kolkata are being introduced. Besides, rake length is being increased from 9 cars to 12 cars for 80 services in Kolkata and 30 services in Chennai.

  • A target to complete 500 km of new lines has been set for 2013-14.
  • There is target to convert 450 km of MG/NG lines to broad gauge during 2013-14.
  • Announcement of resumption of work on new line projects of Chickmagalur - Sakleshpur and Bengaluru - Satyamangalam, which were pending for want of resources and other mandatory clearances, after State Government of Karnataka agreed to give land free of cost and bear 50% of the cost.

Railway budget 2013-14:

New Initiatives Union Railway Minister Pawan Kumar Bansal presented the Union Railway Budget for 2013-14 in Lok Sabha on 26 February 2013. Some of the major Initiative proposed in Railway Budget 2013-14 are as under:


  • Indian Railways will introduce one coach in select trains which will provide an excellent ambience and latest modern facilities and services responding to the Increased Popularity of Shatabdi and Rajdhani Trains. Such coaches will be named Anubhuti with commensurate fare structures.

Amenities for Differently-abled Passengers

  • To facilitate the boarding of trains and exit from the stations for the differentlyabled and the elderly, there is a proposed provision of 179 escalators and 400 lifts at A- 1 and other major stations, affixing Braille stickers indicating the layout of coaches including toilets, provision of wheel chairs and battery operated vehicles at more stations and making coaches wheel-chair friendly.

  • In order to provide an employment avenue to the disabled people, there is proposal to reserve a specified number of Jan Sadharan Ticket Booking Sewak (JTBS) for them, keeping in view the fact that the PCOs at stations have become largely redundant after the mobile revolution in India.

IT Initiatives for Passenger Benefits

  • There will be now Use of Aadhar scheme by Indian Railways. The database generated, can be extensively and efficiently used by railways not only to render more user friendly services such as booking of tickets, validation of genuine passengers with GPS enabled handheld gadgets in trains, but also to provide a better interface with its employees in regard to their salaries, pension, allowances etc.

Some of the other measures proposed under IT Initiative of Railways are:

  • Extending availability of the facility of internet ticketing from 0030 hours to 2330 hours
  • Making e-ticketing possible through mobile phones as a follow up to overwhelming response to IR website and Integrated Train Enquiry Service under 139, a project of SMS Alerts to passengers providing updates on reservation status is being rolled out shortly.

  • Covering larger number of trains under Real Time Information System (RTIS), whereby rail-users will be able to access information through nominated websites and mobile phones.

Some measures taken to curb malpractices in reserved tickets including Tatkal are:

  • Mandatory carrying of ID cards by passengers with reserved tickets
  • Rigorous drive leading to prosecution of more than 1800 touts in the current year
  • In case of tatkal, reduction of advance reservation period to one day, issue of tickets only on production of ID proof at PRS counters, issue of only one tatkal ticket per train per day to web service agents;
  • Denial of access to agents to internet booking between 0800 to 1000 hrs.

Other Major Initiatives

  • A Centralised Catering Services Monitoring Cell with a Toll free number – 1800 111 321 has started functioning w.e.f. 18th January, 2013 to facilitate redressal of complaints/suggestions on real-time basis.
  • For effective quality control, arrangements are being tied up with food testing laboratories in addition to third party audit. State-of theart base kitchens are proposed to be set up in railway premises for better monitoring of quality of meals.

  • ISO certification will now be insisted upon for all basekitchens.

Green Energy Initiatives

Some of the new steps that have been taken or are proposed to be taken include:-

  • Setting up of Railway Energy Management Company (REMC) to harness potential of solar and wind energy
  • Setting up of 75 MW windmill plants and energizing 1000 level crossings with solar power
  • Deployment of new generation energy efficient electric locomotives and electrical multiple units (EMUs) saving about 60 crore units in 2011-12. Railways have also won the National Energy Conservation Award
  • Encourage more usage of agro-based and recycled paper and ban use of plastic in catering.

The focus of the plan seems to be on doubling of tracks, raising capacity, improving safety and significantly enhancing passenger amenities on trains and at stations. Internet ticket booking hours have been extended to allow customers to make reservations 23 hours a day. Like his predecessors, Mr. Bansal could not resist the temptation of announcing a string of new manufacturing units, 67 new express and 27 new passenger trains, in addition to a host of new lines and surveys. Of course, many if not most of these have gone to select constituencies important to the Congress party, and to electorally important States such as Uttar Pradesh, Haryana, Karnataka, and Andhra Pradesh. With general elections due in 2014, Mr. Bansal has used the budgetary means at his disposal to signal the onset of campaign season.

Typically, the budget has skirted the prickly issue of structural reforms. There is no mention in the budget of even the proposal in the last budget to expand the Board to include two members to look after PPP /Marketing and safety/research. The proposal has perhaps been shelved. Overall, the budget conveys an impression of an exercise to keep the system going very much as it has done in the past, at a modest growth rate. Whether such a rate of growth of this key infrastructure sector will be sufficient to sustain the projected growth rates of the economy as a whole remains to be seen.

Gyanesh Pandey