Rail Budget 2016: Analysis & Key Highlights

Industry Practice : Infrastructure
Geography : India

What’s New in Rail Budget 2016?

“Chalo Milkar kuch naya karein” is the tag line for development in railway infrastructure through tariff and non-tariff mechanisms. Under which three innovative measures to be taken as below:

  • Nav Arjan : Identification of new sources of revenue channels for Indian railways to improve the infrastructure
  • Nav Manak : Optimal budgetary planning, effective proactive practices and optimize the operations
  • New Sangrachna: Co-operative approach, collaboration and improved connectivity with new structure implementation
  • Operating ratio will be at 92% in FY 2016-17
  • Working expenditure to be at 11% in FY 2016-17: The working expenditure which was at staggering 32% in the event of application Sixth Pay Commission in FY 2008-09, which would be at 11%, thereby improving by a quantum of 21% in FY 206-17

Railway Saving Plans for 2016-17

  • ₹ 827 Crores saving planned in current FY
  • Long-term power purchase agreements to ensure low payouts in terms of power cost to Indian Railways
  • Effective usage of funds and cost optimization

Investment Updates for FY 2016-17 in Rail Budget

  • Rate of capital investment increased in last quarter of FY 15-16
  • Capital Investment in 2009-14 was at ₹ 48,000 Crores
  • Capital Investment in FY 2016-17 planned at ₹ 1.21 Lakh Crores which is double the average so far witnesses in the country. Major Initiatives announced in Rail Budget 2016 to Improve Investments
  • Joint Ventures (JV) with States to augment infrastructure on pan India basis
  • Rupee Bonds to be floated to get additional funds
  • PPP Initiatives to be boosted for enabling infrastructure
  • Securing International funds on priority to give impetus to R&D projects in country

Swach Rail & Swach Bharat to gain further momentum

  • With fitting of 17,000 bio-toilets planned to be installed in trains this FY is focusing on ensuring priority to PM’s pet scheme of Swach Bharat Mission

Wi-fi enabled station’s count will go up to 100 this fiscal and at 400 in FY 2017-18 in partnership with Google

Power Procurement Improvements for Railways announced in Rail Budget 2016

  • Planned savings of ₹ 3,000 in 2016-17 through efficient usage of electricity
  • Railways to procure more power under Deemed Distribution Licensees route
  • ₹ 17,00 Crores savings to come in effect using direct procurement of power from Generation companies by Railways
  • ₹ 300 Crores of savings planned to come in effect through Demand Side Management (DSM) measures

What’s New for Common Man in Rail Budget 2016-17

enincon’s endeavor was to analyze the budget and filter what was new for common man in this year’s budget and whether the long standing plight of common man has got an addressal. Our QQR specialist team has quickly analyzed and came up with a conclusion that at large it was a win-win proposition for common man. Following are the key announcements:

For Unreserved Passengers

  • Deen Dayalu value coaches to be added in busy route trains to facilitate the common man travel
  • Antyodaya Yojana on dense routes

For Reserved Passengers

  • Humsafar: Fully 3 AC sleeper service exclusively launched                                                                                   
  • Tejas: Operating Speed increased up to 130 km with embedded entertainment services, local cuisine and wi-fi enabled services
  • Overnight Double Decker Train Services: UDAY Express to run in busy routes on pan India basis
  • Hand-held terminals to TTE’s: To facilitate on-spot booking
  • Platform tickets to be available from ticket vending machine                                                              
  • Vending Machines to accept international debit and credit cards to facilitate foreign tourists
  • Vikalp facility to gain further momentum
  • Clean my Coach” service through SMS by individuals

Infrastructure Improvements Announced in Rail Budget 2016

  • Bankable Railway Projects: Such projects to increase in numbers in this fiscal with improvements in institutional finances with LIC planning to invest ₹1.5 Lakh Crores upon same. This would be higher by a margin of 20% than previous year
  • 2800 km of new railway track to be completed in FY 16-17
  • Broad Gauge expansion rate to be improved at 13 km/day from previous best of 7 km/day in FY 16-17. Targets for following year of 2017-18 kept at 17 km/day
  • 1600 km of fresh electrification of tracks planned with least capital investments and in partnership with Ministry of Power in 2016-17. Same capacity to be up to 2000 km in 2017-18
  • Dedicated Freight Corridor (DFC) touted as the largest infrastructure project for the country to witness award of all Civil contracts by end of FY 2015-16. Delhi – Chennai and Kharagpur – Mumbai part of DFCs to see completion in this fiscal
  • Port Connectivity under Coastal Connectivity Program the ports of Jaigad, Dighi & Paradip to be included under the program. Nargol & Hazira to be further developed under PPP routes
  • Better connectivity in North-East corridor of the country. LoomdingSilchar route work in progress; to be completed in this fiscal. Mizoram & Manipur to be soon under broad gauge
  • Northern Region to get a boost with KatraBanihal section tunneling work completed up to 35 km out of 95 km
  • De-congestion work in terms of track doubling and increased bridges network on under Jalandhar – Jammu section
  • National Rail Plan: Integrated planning for cost optimization to come into effect for long-term
  • 1 GW of Solar Projects to be developed by Railways in FY 2016-17

Make In India (MII) Initiatives & Other Announcements to bring more to India Railways

  • Bid for ₹ 40,000 Crores already done on highly transparent mode for manufacturing locomotives in the state of Bihar.
  • Employment potential to get enhanced in eastern region due to the planned locomotive manufacturing facilities
  • Small & medium ancillary manufacturing units to get a push
  • To facilitate capacity expansion moves like ease of business in collaboration with state’s to improve overall rail infrastructure
  • All procurement to be done through e-route with embedded transparency
*The views expressed in this article are solely those of enincon perspectives and do not necessarily represent those of Enincon LLP.

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