Budget 2020: Railways left high and dry with very little investment push

The NDA government’s focus on the railways seems to be weaning away with no real push to the national transporter. 

While the railway efficiency parameter, reflected in the operating ratio of 97.46 per cent, continues to be a worry, Finance Minister Nirmala Sitharaman’s second Budget gives no boost to investment in the railways.

The gross budgetary support indicates the government investment will increase by just Rs 2,163 crore or 3 per cent to Rs 70,000 crore in 2020-21. This is despite the purported emphasis on infrastructure creation after announcement of the National Infrastructure Pipeline.

The capital expenditure of the railways, at Rs 1,61,042 crore in 2020-21 will be about 3 per cent higher than this year’s revised estimate of Rs 1,56,352 crore. Considering that the current year’s capex is about 17.2 per cent higher than the previous year, it appears that the government is not aiming for any substantial increase in spending next year.

Sitharaman, in her Budget speech, admitted that the railways had a small operating surplus and this called for optimisation of costs.

The reliance on borrowings will increase by Rs 7,471 crore or 13 per cent to Rs 65,471 crore. Of this, Indian Railway Finance Corporation (IRFC) will be raising Rs 30,000 crore which is lower than the Rs 34,031 crore for the current year.

This comes even as the expectation from private investment, through public-private partnership (PPP), has been scaled up to Rs 25,292 crore for 2020-21 from Rs 17,776.33 crore. “Four station re-development projects and operation of 150 passenger trains would be done through the PPP mode. The process of inviting private participation is under way,” said Sitharaman in her speech.

The total railway receipts is estimated at Rs 2.06 trillion during 2019-20 which is expected to rise 9.5 per cent to Rs 2.25 trillion next year. 

At the same time, the expenditure is estimated to rise 8.37 per cent to Rs 2.19 trillion next year from Rs 2.02 trillion this year. The railways, in fact, is keeping a close tab on its expenditure in order to get over the financial stress and managed to cut down expenditure by Rs 5,442 crore.

For 2019-20, the railways had expected to keep its operating ratio at 95 per cent but the increased pension burden and slowing economy is estimated to push up the ratio to 97.46 per cent. This will almost be the same as last year. A more realistic target of 96.28 per cent is being aimed at for 2020-21.

Among big-ticket projects are electrification and signalling. The railways plans to electrify the entire broad-gauge network by 2023-24. The target of new lines, gauge conversion and doubling/tripling, among others, for 2020-21 is 3,750 route kms against 3,150 route kms in 2019-20. The railways also plans to induct the latest technology for its signalling and telecommunication system. Under the modernisation plan of the railways signaling system, it has been decided to implement the centralised traffic control (CTC) system. This will increase operational efficiency.
In the first phase, the CTC will be implemented on 1,830 kms over eight zonal railways on sections provided with the automatic block signalling system. 

Moreover, in the second phase, the CTC will be implemented over the balance eight zonal railways along with the automatic block signalling system.

The government has also initiated upgrade of the decade-old signalling system into an automatic train protection system. It will be a mix of proven international technology as well as indigenously developed systems with an impetus on Make in India.

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