Rail Budget 2015-16 India Update : Budget focuses on augmenting financing: Rail board chief

Terming the Railway Budget as ‘path-breaking’, AK Mittal, chairman of the Railway Board, said its thrust was on laying down a framework for greater institutional financing and added that he expected big-ticket projects to come in over a period of time.

In an interview with Rituparna Bhuyan, Mittal said that the Budget had laid down investments worth up to Rs 6,000 crore through the public-private partnership (PPP) route and said an effective policy framework for foreign direct investment (FDI) had been laid down.

While conceding that non much progress has been made in the railways’ plans to redevelop stations, the board chief said railways had identified 10 stations to be redeveloped.

On the freight hike, Mittal said it was more a “rationalization” of rates and said it would result in a revenue gain of Rs 4,000 crore. “So, on average it may work out to be even less than 3 percent which cannot be said to be a substantial freight hike,” he said.

On electrical energy side we are talking directly to producers because we have been given deemed licensee status and we will be reducing the energy cost of electrical energy, diesel prices are already softening. On staff cost also we are taking certain measures so as to reduce the costs. All these measures combined have resulted in an improved operating ratio of 88.5 percent.

It is really not a freight rate hike. It is basically a combination of three factors. It is reclassifying the commodity, reclassification of the rate as well as slab rates. The combined effect of this will result in some minor hike in some of the commodities but it will also result in reduction of rates in some of the commodities. So, it is not a straight freight hike but some rationalisation of freight.

That may be the highest increase that you are looking for. What we have selected the commodity is, number one the common man is not affected, we are expecting to achieve only around Rs 4000 crore out of total freight earning of more than Rs 1.2 lakh crore. So, on average it may workout to be even less than 3 percent which cannot be said to be a substantial freight hike. In fact this type of rationalisation we keep doing during the course of the year from time to time. So, there was absolutely no specific necessity of mentioning it.

We are after all in a business. We have to make a balance between the input cost and output cost. If input cost goes high, we definitely go in for the freight or fare hike so as to have a balance and so as to serve to our best capabilities to the people of India.

This is a path breaking Budget where not only we have given the planned program for one year, we have also laid down a roadmap for five years. This has happened for the first time. In fact we intend to expand around Rs 8.56 lakh crore over a period of five years and in the first year itself we are targeting Rs 1 lakh crore which is 52 percent higher than the planned outlay of last year.

Now, this planned outlay consists of support in the form of gross budgetary support that we get from ministry of finance. Then we have internal generations and then we have some conventional buying from borrowing through Indian Railway Finance Corporation (IRFC). This time we are also going for some institutional financing which our honourable minister for railway had mentioned in his speech referring to multilateral funding and all that; not that we are not looking for FDI or public–private partnership (PPP). Through PPP route we have provided for Rs 6000 crore in case you see the Budget documents carefully. FDI also we have laid down the policy framework. We expect some big ticket projects to come in over a period of time.

We have already had discussions with World Bank and they have shown interest in funding railway projects which are bankable. We are also going for FDI in a way that we have big ticket projects like loco factories and all that which are moving forward. Further, if you seen ministers speech carefully, he had made a big announcement about train sets which are going to change the scene of our mainline intercity expresses. Those train sets also, initially we may go in for a small import but ultimately they are going to be made in India and that will be only through FDI route.

Asset monetisation basically means I am leasing out my assets for some earnings. I am not selling that asset. It may be by way of station redevelopment where I lease out my air space for getting revenue. While I modernise this system I also get revenue and in turn also get the improved technology for doing it. That is basically monetisation of assets in a way that I earn the revenue without loosing the proprietorship of that particular asset.

We are still working on that for advertising basically one of the components of this advertising and one of the committee has recommend that we can earn around Rs 10,000 crore out of advertising itself which presently is peanuts.

Initially, we have identified five stations then subsequently that number was increased to ten. Somehow we have not been able to make any substantial progress on these stations except for one which is Habibganj near Bhopal. Where we have got al clearance from state municipal bodies etc and we are going for request for qualification (RFQs). So we hope to have agency fix for redevelopment of that particular station in another few months time. The money required for redevelopment will depend upon the plan and size of that station. For Habibganj Bhopal a station the money may be little less than say around Rs 300-400 crore.

No Digital India we are already on social networking sites and we are communicating with our stakeholders. We have Indian Railway Catering and Tourism Corporation (IRCTC) which is one of the sites, portals which get maximum hits as far as Digital India is concerned. That is one of the most popular sites. We are going to sell the space on that site also to get more revenues.

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