Customer takes first class seat in Prabhu’s plans

Critical projects to be expedited; three cross-country freight corridors announced

Railway Minister Suresh Prabhu effected no hike in passenger fares, indicated a cut in freight tariffs, admitted that the global economic slowdown is hurting India’s core sectors and pointed out that the looming impact of the Seventh Pay Commission made it one of the toughest times to formulate a Budget.

Yet, Mr. Prabhu, in his second Rail Budget presented on Thursday, unveiled a bouquet of new train services, innumerable new initiatives to make life easier for passengers and proposed an ambitious capital outlay of Rs. 1.21 lakh crore for 2016-17, a jump of 21 per cent over this year.

While the Railway Minister didn’t refer to a sharp 50 crore shortfall in his passenger traffic estimates for 2015-16 — the Railways is expected to carry just 810 crore passengers down from 860 crore that he had projected in the last budget — he sought to win back passengers by offering some airplane-type features like on-board entertainment and travel insurance options at the time of booking.

The Minister also signalled a fresh approach to woo industry from alternative modes of transport that have chipped away a large share of its freight traffic over the years, by moving away from the typical focus on increasing revenues through tariff hikes.

“We want to challenge our conventional thinking on freight policies to win back our share in the transportation sector,” Mr. Prabhu said. “We will exploit new sources of revenue so that every asset, tangible or non-tangible, gets optimally monetised,” he said, referring to potential revenues that could accrue from advertising and monetisation of the Railways’ vast land holdings.

Chairman of the Railway Board A.K. Mittal later said the Railways is looking at bringing down its freight rates for the first time in the coming year, in a bid to increase revenues through higher volumes.

While Mr. Prabhu reiterated the government’s commitment to rev up the economy through public investments, he is betting on a string of belt-tightening measures, other income and optimism to fulfil that commitment with gross budgetary support of Rs. 45,000 crore for the public utility in 2016-17.

Pointing to austerity measures yielding savings of Rs. 8,720 crore this year, the Minister promised to increase cost optimisation in diesel, electricity and other expenses. “…With an optimistic outlook for the economy… we hope to generate revenues of the order of Rs. 1,84,820 crore next year, 10.1 per cent higher than the revised target for 2015-16,” Mr. Prabhu said.

Tapping new revenue streams and optimising expenses are part of a new structure Mr. Prabhu announced to revitalise the Railways.

More powers to zonal railways for faster decision-making

Besides proposing to tap new revenue streams and optimising expenses, Railway Minister Suresh Prabhu in his budget presented on Thursday announced a radical overhaul of its organisational structure, more transparency and a hard look at the status quo on its operational parameters such as the average train speed.

Significantly, the Minister said more powers have been delegated to the zonal railways for faster decision-making. He has also introduced accountability for officials not usually seen in the government. This includes defining key result areas (KRAs) for general managers and divisional railway managers to evaluate their performance. He also said a single official would be made accountable for each train’s on-board experience to address passenger concerns, even as a third party audit will be conducted to ensure the quality of services on trains and stations.

While the government stuck to its stand on not announcing new train routes in the Rail Budget, it however committed to expediting critical projects to connect the North-East and Jammu and Kashmir with the rest of the country.

The Railway Minister also announced three new dedicated freight corridors to connect North-South (Delhi to Chennai), East-West (Kharagpur-Mumbai) and East Coast Corridor connecting Kharagpur to Vijayawada. The projects, he said, will be taken up on a priority basis.

Over the next four years, the Minister said the Railways will work on ensuring reserved accommodation to travellers on demand, time tabled freight trains (for which a pilot will be started in 2016-17) and semi-high speed trains along the Golden Quadrilateral.

“That new project announcements are limited indicates adherence to implementation focus, highlighted in the previous Budget,” said Manish Agarwal, Partner and Leader-Infrastructure, PwC India. “Among the new announcements, East Coast connectivity through Dedicated Freight Corridor is perhaps the most impactful, as it would contribute to India participating in global production networks in South East Asia, and to Make in India,” he said.