Rskhurana17's List: for railway inputs

• The Indian Railway Overload

   

  The Railways is missing its revenue targets and facing a cash squeeze just when it needs the money for large investments

   

        by K.P. Narayana Kumar | Feb 23, 2011

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• depletion in finances due to the slowing down of growth in its freight business. It is also struggling with the financial burden of the payout for the sixth Pay Commission (around Rs. 55,000 crore between 2008 and 2011).  
• The national transporter is expected to register a shortfall of over Rs. 4,000 crore on an estimated Rs. 92,000 crore in revenue from freight and passenger business this year.
  
• he Railways has faced several problems since the last budget. The increase in fuel prices is expected to inflate its expenses by Rs. 1,000 crore.
• Private container train operators who were given licences during Yadav’s regime have complained that the Railways is not helping them carry more freight and have decided to hold up around Rs. 2,000 crore of investment in the sector
• Several other public-private projects including modernisation of railway stations have not taken off due to a paucity of funds.
• he Railways had a fund balance (or self-generated reserves) of Rs. 19,700 crore. It had to wipe the fund balance clean in two years in order to bankroll its salary costs under  the Sixth Pay Commission as well as pay dividend to the government in 2009-10.
• The timing could not be more unfortunate as far as India’s infrastructure sector is concerned. Take for instance the Dedicated Freight Corridor project, which is expected to now cost around Rs. 77,000 crore, including the cost of borrowing and inflation.
• The Railways is banking heavily on DFC to decongest its clogged network that today can move its ‘superfast’ trains at a maximum speed of a mere 140 kmph
• It will provide a separate line for freight transportation. This will help substantially increase speeds of both passenger and freight trains, making it more competitive against airlines and snatching business away from road transporters. The project, which was announced in 2005, involves building an exclusive freight line each in the west and the east to connect Mumbai and Kolkata with Delhi.
• owever, the project which
• was supposed to be completed by 2012 as per the original schedule, is yet to take off due to delays in land acquisition and finalisation of the alignment of railway lines.
  
• But now, just as the decks had been cleared for the Railways — after it made substantial progress in tying up funds from the World Bank and the Japan Bank for International Cooperation — to start funding the project, it has become cash-strapped.
• ailway finances have become a controversial subject in India ever since Mamata Banerjee picked holes in the claim of financial turnaround achieved by her predecessor.
• In a white paper presented to Parliament in 2009, Banerjee said the cumulative cash surplus before dividend for the years between 2004 and 2009 would have been just Rs. 62,363 crore instead of the previously claimed Rs. 88,669 crore, but for certain changes made in the accounting system.
• Railways under the Lalu administration used to show depreciation, interest on deposits and lease charges as part of the surplus. In 2007-08, these three heads accounted for around Rs. 8,400 crore of the Rs. 25,000 crore shown as surplus. The Banerjee administration has since then reversed this approach.
• ven as the railway administration has to cope with the reality of the revised, gloomy numbers, it has to gear up to execute massive projects such as the DFC, the construction of three rolling stock factories and expansion of rail lines (all promised by Lalu Prasad Yadav
• The DFC project requires around Rs. 4,000 crore every year from the Railways. Where is the money going to come from, given the state of the finances? My faith in God will get multiplied if the DFC is constructed in the next 10 years,” says infrastructure expert Akhileshwar Sahay of Feedback Ventures.
• A senior officer with the Dedicated Freight Corridor Corporation says that if the situation warranted it, the Railways would have to take a call on diluting its equity in the project and execute the project as a public-private partnership. “The gross budgetary support from the government will definitely have to go up as the Railways’ requirement for funds is also going up,” this officer says.
• The government had provided a gross budget support (GBS) of about Rs. 15,800 crore this fiscal. Concerned officers in the Railways say the ministry had sought twice the amount for 2011-12.
• efusing to state the amount of budgetary support sought by the ministry, Jha says, “We need more support from the Centre if the Railways is to grow.”
• . He says it would have to defer allocating money under several heads such as staff quarters, amenities for staff, passenger amenities and investment in public sector units
• Working expenses will have to be severely curtailed this budget so that money can be found for the most crucial works.  The Railways can save up to Rs. 6,000 crore by holding back on the less important items,” he says. 

21 more annotations...

• The White Paper, while estimating the losses in passenger services at Rs 14,000 crores in 2008-09, offers no corrective measures and admits that freight rates of foodgrains and fertiliser increased by 44 per cent and 35 per cent, respectively, during the five-year period that ended in 2008-09
• Interestingly, there has been practically no increase in passenger fares for more than a decade.
• This reluctance on the part of successive railway ministers should be seen as an act of misplaced generosity: the rural poor, who cannot afford rail travel or have no access to rail network, are made to subsidise travel by urban people by bearing the brunt of hikes in the cost of transportation of essential commodities (foodgrains, fertilisers, pulses, oil, salt, cement, etc).
• That the Railways is “far from achieving operational and efficiency parameters compared to global benchmarks” is accepted by the White Paper, but it does not indicate how things can be turned around.
• Not surprisingly, industry often complains about the cost of rail transport in India being one of the highest in the world.
• is common knowledge that the Railways do not have the necessary resources to translate even half of those intentions into reality
• The resource requirement of the Railways is estimated at Rs 14,00,000 crore, or an annual average of Rs. 1.4 lakh crore a year to realise the “Vision 2020” .
• Budgetary support would have to be around Rs 5,00,000 crore in 10 years, or an average of Rs 50,000 crore per year, compared with the current level of Rs 8,000 crore per year.
• s obvious that the Budgetary support cannot increase so dramatically, given competing demands on the limited resources available with the Government. Besides, raising about Rs 65,000 crore (46 per cent of the total fund requirement) per year by way of internal generation is going to be an uphill task.
• the Railways have been talking about developing high-speed passenger corridors, multi-modal logistics parks, and world-class stations through the PPP route.
• The progress on all these fronts has been insignificant, going by the Railways' own White Paper. The transportation of containers by rail, thrown open to private investors about three years ago, has achieved limited success so far. There is a sense of despondency among the private investors in the container sector, who see their investments yielding little.
• Wagon Investment Scheme (WIS) was withdrawn and replaced by another scheme, for which there are hardly any takers; the Terminal Incentive cum Engine-on-Load Scheme(TIELS) has been put on hold; no significant progress made as far as commercial exploitation of land/air space, or expansion of the OFC network are concerned.
• the rethinking and prevarication on land acquisition for the proposed Dedicated Freight Corridors, one is not sure if the showpiece projects of the Railways will take off in the foreseeable future. There is no policy statement announcing the Railways' PPP vision, together with a road-map till 2020.

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