March 14, 2012

Indian Railways to boost spending and investment

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THE 2012-13 railway budget, presented by railway minister Mr Dinesh Trivedi in the Indian parliament today, calls for total spending of Rs 601bn ($US 12.3bn), which Trivedi says is the highest ever. But capital investment during the 12th five-year plan, which runs from this year to 2017, will more than treble from Rs 1.92 trillion during the 11th five-year plan to Rs 7.35 trillion.

Trivedi wants Indian Railways (IR) to reduce its operating ratio from 90% currently to 84.9% by the end of 2012-13 and to achieve 72% by 2016-17. He also wants railway safety to be benchmarked with other railways around the world and plan to set up an independent railway safety authority.

"I had two very clear yet contrasting options - either to keep the railways in status quo mode with just incremental annual changes or bite the bullet," Trivedi told parliament. "The second option would involve going for a generational change with a focus on safety and inclusive growth to meet the aspirations of this great country in the next decade. I chose the generational change."

Trivedi says Rs 5.6 trillion is needed to modernise IR, and that IR must get about 10% of the Rs 20 trillion which the government expects to spend on infrastructure projects during the 12th five-year plan. However, he acknowledges that IR does not make sufficient profit to fund several projects. Trivedi told parliament that World Bank funding of Rs 65bn has been firmed up for the dedicated freight corridors, that 3300km of land had been acquired for the two new lines, and that the first contracts will be awarded in 2012-3.

Investment in rolling stock is budgeted at Rs 1.7 trillion during the next five years. This will include 2100 coaches designed to accommodate disabled passengers, and fitting environmentally-friendly toilets on 2500 coaches to stop the discharge of sewage on the tracks.

Projects to build 85 new lines will be launched in 2012-13, with surveying to be undertaken for another 114 planned lines. IR will spend Rs 68.7bn on constructing new lines in 2012-13 plus a further Rs 4.4bn to increase capacity.

During 2012-17, IR plans to resignal 19,000km and electrify 6500km of lines. IR also wants to increase the maximum speed on some of its main lines to 160km/h, which on the Delhi - Kolkata route would reduce the journey time from 17 to 14 hours.

Freight traffic for 2012-13 is forecast at just over 1 billion tonnes, generating Rs 893.4bn in revenue, while passenger earnings are estimated at Rs 360.7bn.

Controversially, Trivedi has decided to increase train fares for the first time since 2004. This will generate an addition Rs 40bn in revenue, helping to boost total turnover in 2012-13 to Rs 1.32 trillion. However, Trivedi suggests setting up an independent tariff authority.

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