The Railways Budget for 2015-16 has been presented in Parliament by the Honourable Union Minister for Railways, Suresh Prabhu, wherein the Government has proposed a five-year investment outlay of Rs 8.5 trillion. This document gives a summary analysis of the Railway Budget. The Railway Budget signifies the priority accorded to the development of the railways as an engine of India’s growth and development. The Operating Ratio (proportion of revenues that Railways spends on operations) has been targeted at 88.5% for 2015-16, which has been consistently above 90% for the past five years. According to Budget Estimates, Plan Outlay for 2015-16 has been proposed at Rs 1.1 trillion, an increase of 52% over 2014-15. The budget also described its plan to procure money from debt raised by new holding companies or by railways-owned companies. The Minister also presented a White Paper on Indian Railways before tabling the Rail Budget and he is likely to release a vision 2030 document soon. These documents and the government’s bid to become more consumer-focused, both towards passengers and freight customers is being seen as a step away from politics and towards reform.

1. Railway Budget
2015-16
Four Goals
To deliver a sustained
and measurable
improvement in
customer experience
To make the railways a
safer means of travel
To expand railway
capacity and modernise
infrastructure
To make the Indian
Railways financially
self-sustainable
Five Drivers
Adopting a
medium-term
perspective
A white paper
on the
railways
placed today,
a Vision-2030
document to
be released
soon
Building
partnerships
Align with
states, public
& private
sector to
access
funding and
technology
Leveraging
additional
resources
Investment of
Rs 8.5 lakh
crore in next
five years,
mobilised
from multiple
sources
Revamping
management
practices
Improved
accountability,
management
information
systems and
personnel
training
Setting
standards for
governance
and
transparency
Ten Focus Areas
Quality of Journeys
Station Redevelopment
• Budget for passenger amenities up by 67%
• New toilets covering 650 additional stations
• 17000 bio-toilets in coaches
• Built-in dustbin facility in non-AC coaches
• All India 24*7 helpline number 138 to be launched
• Toll free number 182 for women safety
• Unreserved ticket purchase through smart phones;
debit cards
• Online booking of retiring rooms & wheelchairs at
select stations
• 120 crore for lifts/escalators at major stations
• Open bid for interested parties for station
redevelopment
• Satellite terminals to decongest cities and provide
services to people in suburbs
Capacity Augmentation
• 84% higher capital allotment for modernization of
1200 kms of tracks at 8686 crore
• 2700% higher sanction for doubling/ tripling/
quadrupling track along with electrifications
• Evaluation studies for introduction of high speed trains
being undertaken
Safety
• Five year safety plan to enhance train safety
• Train protection warning system and train collision
avoidance system to be installed on select routes
• Over bridges and under passes for reducing number of
level crossings
• Development of audio visual warning systems for
unmanned level crossings in collaboration with ISRO
Technology Upgradation
• Innovation council to promote technology
development and manufacturing
• Railways research centres in select universities
• Bar codes/RFID for tracking parcel and freight wagons
• Upgradation of equipment for track examination

2. Partnerships for Development
• Focus on Public Private Partnerships (PPP)
• PPP cell in Railway Ministry to be made result oriented
• Projects for railway connectivity to many ports and
mines being developed
Ten Focus Areas
Improvement in Management Processes
• Improvement in management processes to further
delegate, de-centralise and de-regulate
• Expand paperless working in material management
system
• Improve existing appraisal mechanism for selection of
projects
• Identification of global benchmarks for key operating &
maintenance activities
Resource Mobilisation
• Tap long term funds such as insurance and pension
funds, multi-lateral and bi-lateral agencies, to finance
remunerative projects
• Launch projects worth 2500 crore through
BOT/annuity route
Human Resources
• Systematic human resources audit to be initiated
• Special training in soft skills for frontline staff
• To set up full-fledged university in 2015-16
Energy and Sustainability
• Setting up environment directorate for focus on
environment management
• Savings of 3000 crore through bidding process and
bilateral arrangement for power procurement
• 1000 MW solar plants funded by Ministry of New and
Renewable Energy to reduce dependence on fossil
fuels
What’s in it for Industry?
In his first Railway Budget speech Minister Suresh Prabhu
departed from the usual practice of announcing new trains and
instead focused on increasing long-term investments. The budget
is being seen as a statement of intent of the Modi government to
kickstart growth through higher public investment. The Minister
flagged the lack of adequate investments in railways leading to
bottlenecks in capacity augmentation. In order to make Indian
Railways the prime mover of the economy, he emphasised the
need for collaborating with foreign partners to gain access to
cutting-edge technology and finance. The Minister also
attempted to weave his budget around Prime Minister Modi’s
flagship projects like Digital India, Make in India, Skill India and
Swachch Bharat (Clean India). These measures will heavily depend
on the use of technology to improve passenger amenities,
increase safety and squeeze more efficiency from the
organizational behemoth.
Intent for reforms
In his erstwhile position as the Minister of Power during the
Vajpayee government, he was hailed for reforming the Power
sector. Keeping in mind these credentials, PM Modi brought in
the Minister with the precise mandate to reform the complex
Railway Ministry. The minister is also known to be pro-industry
and he is likely to leverage the private sector more extensively.
Public Private Partnership focus
For the private sector, the Minister announced that the PPP
(public-private partnership) cell of the Railways Ministry will be
revamped to make it more result oriented. JVs will be set up with
States for focused project development, resource mobilisation,
land acquisition, project implementation and monitoring of critical
rail projects. In order to meet the requirements of new lines, JVs
will also be set up with major public sector customers. The
government has announced its intention to interact with Industry
and take further steps to attract investment under PPP through
the BOT and Annuity routes.
Modernisation of the railways and infrastructure
The budget’s focus on modernisation is likely to cheer both the
consumer and the industry, especially the technology sector. The
private sector is likely to benefit from the government’s focus on
infrastructure improvement. The Budget has also proposed
constituting an innovation council called “Kayakalp” for business
re-engineering and introducing a spirit of innovation in Railways
besides setting up of Technology portal to invite innovative
technological solutions. The government is likely to invite
partnerships in activities like station improvements, wagon
purchases, catering, wi-fi, and logistics. Steel, power and infra-
related sectors are likely to be spurred by the intent to improve
freight corridors, track renewal, bridge works and electrification.
The increased focus on improving technology driven ticketing,
signalling, etc. is likely to benefit the IT sector.
Hike in Freight rates
While the budget intends to hike freight capacity to 1.5 billion
tonnes, the Minister has proposed to hike freight rates for 12
commodities in the range of 0.8 per cent to 10 per cent including
urea, cement, coal, iron and steel. The Railways Minister has also
raised the base freight rate by up to 10 per cent. These
announcements are likely to push up prices for commodities in
the near future as well as for cement, steel and power.
What comes next
The railway budget shall now require approval from parliament.
However, plans to reconfigure the Railway Board and to find
solutions to mobilise resources for big-ticket projects are already
under way.
Contact Edelman India Public Affairs
Peter Bellini
Associate Director & Head of Public Affairs
Peter.Bellini@Edelman.com
@EdelmanIndiaPA