GEPL Research : Railway Budget wrap


Rail Minister Ms. Mamta Banerjee presented the rail budget for the second consecutive time in a time span of less than one calendar year. Following are the key take away’s from the proposed financial exercise for the next financial year undertaken by the fourth largest rail organization in the world.

Socialistic initiatives continued to dominate the agenda for the rail budget presented for the year 2010 – 11 while the initiatives underlined from the commercial point of view failed to bring any cheer for the ancillary industry as well as the vendors of Indian railways.

The budgetary exercise planned for the forthcoming year is in line with the ministry’s plan of action formulated as per white paper “Railway Vision 2020” which intends to unlock the value of Indian railways. Performance of the year under consideration was satisfactory post the impact of global slow down which had severe impact on the major customers of railways.

(in Million Tonnes)
Loading Target Achieved 882
Loading Target Expected 944
Potential YoY rise expected 7%
(Amt in Billions)
Revenues achieved in 2009 – 10 883.56
Revenues targeted in 2010 – 11 947.65
Potential YoY rise expected 7%

Funds to the tune of Rs.414.26 Billion are sanctioned which represented an increase of 3% YoY for various debottle necking initiatives. Majority of the expansion initiatives undertaken by the minister were of routine nature while some fresh initiatives like high speed rails, commercially favorable terms of PPP (Public Private Partnership), new factories for wagons and axles etc continue to be on the drawing board stage.

Initiatives undertaken which are backed by absolute clarity in terms of fund allocation would include:

(Amt in Billions)

Initiative Funds Allocated Major Beneficiaries
– New Rail Lines 44.11 Kalindee Rail,
L&T
– New Metro projects 10.01 C&C Constructions
L&T
– Acquisition of 18000 wagons Texmaco
BHEL
BEML
Titagarh Wagons
– Installation of Anti – collision device in 3 more Zonal railways Kernex Micro Systems
– 800 Km of gauge conversion Kalindee Rail

Conclusion:

Majority of initiatives undertaken in the budgetary exercise are of routine nature and are expected to face execution challenges like the previous budgets. Drop in freight rate for selected few essential commodities would be an indirectly benefit logistics companies having own dedicated freight corridors.

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