India Inc. welcomes railway budget

Last Updated: Tue, Feb 26, 2013 22:23 hrs

Indian industry insiders on Tuesday welcomed Railways Minister Pawan Kumar Bansal's annual budget for the Ministry, saying that it addressed immediate concerns of the sector.

The Chairman of SAIL & NMDC, C S Verma Tuesday said that the Railway Budget 2013 has come at a time when the Indian economy is faced with difficult choices, here.

Verma said, "We welcome the Rail Budget 2013, which is growth-oriented, while aiming for financial sustainability."

He added, "The Rail Budget has a 20 percent higher plan outlay of Rs 63,360 crores in FY14, over this year estimated, which augurs well in enhancing the railway infrastructure, which is the need of the hour. For the steel and mining industry, the last mile connectivity planned for some ports and mines will facilitate the competitiveness of our industry."

"The investment planned by Indian Railways in the 12th Five Year Plan of Rs 1 lakh crores , through the PPP mode is eagerly awaited by the steel industry."

Verma added, "The thrust of the rail budget on new projects like DFCC, new coach manufacturing plants, up-gradation of stations, doubling of lines/ gauge conversion will definitely boost steel consumption as Railways are one of the largest consumers of steel in the country."

"The increased investment by Indian Railways will spur steel consumption at a time, when large capacities for steel are being installed by SAIL, which shall be beneficial to us."

He further said, "However, the fuel adjusted component linking freight tariffs with fuel prices is expected to increase tariffs by 5 percent w.e.f April 1, 2013. For SAIL, this is estimated to have a negative implication of Rs 200 crores per annum on inward traffic and around Rs 100 crores per annum, on outbound finished goods traffic."

As the United Progressive Alliance (UPA) government published the railway budget presented by Railway Minister Pawan Kumar Bansal Tuesday, it drew mixed reactions from various corporate institutions.

The Director General of Bengal Chamber, P. Roy said that despite the poor financial health of the Railways and the deteriorating standards of service, Bengal Chamber views the Railway Budget as pragmatic and balanced having comprehensively addressed the needs of the various sectors of the economy and the growth needs of the Railways as well as Safety and Modernization.

"It is in tune with the vision of the 12th Plan and reforms that the Government would like to take forward."

Roy said, "As far as the Industry is concerned, the increase in freight rates is not too severe but is linked to fuel price adjustments. However, efficiency has been stressed and linkages have been planned to the coal and iron ore mines."

"Targeted Operating Ratio improvement makes the budget further commendable. PPP has been budgeted at 1 lakh crores but appears ambitious unless there is implementation focus."

"Passenger have not been burdened unduly in terms of direct fare increase but charges for additional services such as, reservation, cancellation & Tatkal have been enhanced, as also for upper class and long distance travel."

He asserted that West Bengal has got 18 new suburban trains and longer rakes for the Metro to benefit the common man.

"However, there is no mention in the budget regarding the Railway projects announced previously for the State except that the East-West Metro project should go forward as also the extension from Dum Dum to Noapara," Roy said.

Executive Director of Kolkata based investment banking firm LSI Financial Services Pvt Ltd, S D Mookerjea said, "LSI believes that the Railway Budget proposed has attempted to address some of the problems of railways like passenger safety , service quality and to a small extent the revenue generation."

Mookerjea added, "However we believe that the revenue generation effect should have taken a broader base considering the expected annual loss of Rs 24600 crores as well as to mitigate the crying need for Capital Expenditure which is required to modernize the railway network and to tighten the passenger safety system."

Joint Managing Director of integrated supply chain and logistics solutions provider Transport Corporation of India, Vineet Agarwal said that Railway Budget 2013-14 has been a mixed bag for both passengers and the logistics sector.

Agarwal said, "The minister deserves special kudos for continuing with the modernization drive despite the Finance Ministry clearly hinting spending cuts across various sectors. The move, we believe, will go a long way in re-instating the faith of passengers and India inc., in the Indian Railways as a safe, comfortable and reliable mode of transportation."

"We welcome the decision of the Ministry to appoint a Freight Regulator to decide on freight rates. This will lead to justified freight rates thus giving a boost to PPP projects by encouraging investment by private players in the logistics sector."

He added, "The ambitious target of Rs. 1 lakh crore through PPP in rail projects under the 12th plan is also very encouraging and shows government's commitment to modernize the sector despite fund crunch."

He noted that no announcement to introduce high speed trains has come as a disappointment for the logistics sector that has an abysmal record when it comes to timely delivery of goods and services.

"We hope that the continuous push to electrification, gauge conversion and new lines will make the railways and the logistics sector efficiency."

Agarwal asserted that the decision to constitute a debt service fund should help in improving the financial health of railways that has been struggling to raise funds for the maintenance and development.

"We find the freight earning target to be ambitious and hope that ministry will take measures in due course of time to achieve it. The move will not only boost the logistics sector but will also lead to the growth of other related sectors like Wagon manufacturing etc."

He asserted, "We are hopeful that the move to improve connectivity with ports and mines will bode well for India Inc., as it will ensure easy availability of raw materials for industries and boost trade."

"We also expect investments to improve signal systems and decided to develop 1500km of the dedicated freight corridor to de-congest existing freight corridors or facilitate faster movement of goods in existing freight corridors."

"Introduction of dynamic fuel surcharge that may lead to 5 percent rise in the freight price is a major dampener for the logistics sector that has already seen a hike in freight rates recently by railways and due to diesel price de-regulation, he noted.

"No announcement to develop multi-modal logistics parks has also come as a major dis-appointment for us and we expect the government to take measures towards creation of the same in due course of time," he said.

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