The Mint Report for 24 February 2010

The Mint Report for 24 February 2010

Railway minister Mamata Banerjee presented the railways budget for 2010-11 in a two-hour long speech on Wednesday. Large portions of the speech were taken up in reading out the names of new stations or trains. But the railway minister also laid out ambitious plans for future expansion.

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These include building more than 1,000 kilometres of new track by March 2011 as well as acquiring 18,000 rail cars during the same period. To help fund this and other projects, the railways plans to borrow Rs9,120 crore from the market in coming fiscal year and also increase income from non-core activities to Rs1,000 crore from the current Rs150 crore.

Wednesday’s railway budget also listed avenues for private involvement. These include allowing private operators to invest in rail infrastructure and run special freight trains. The government also plans to bring in public private partnership investments worth Rs858 crore in the coming fiscal year.

While Mamata Banerjee talked about streamlining the railway’s operations, its finances have worsened over the last year. The railways are expected to generate just Rs951 crore in surpluses in 2009-10 against an earlier expectation of Rs2,642 crore. And the amount the railways spends to earn every Rs100 in revenue increased from last year’s budgeted figure of Rs92.50 to Rs94.70. Another problem for the Indian Railways is that adding new lines could be expensive. One railways official told Mint every new kilometre of track would cost an average of Rs7 crore.

The department of telecommunications has announced yet another time-table for the auction of 3G spectrum. It will issue a new notice inviting applications or NIA by Thursday describing the details of the auction including the frequencies it will put on the block. Bidders will have to file their applications by 19 March while the actual auction will begin on 9 April. Before that, a mock auction will also be held on 5-6 April.

Also in telecom, Aircel plans to invest $1.4 billion this year on expanding its operations nationwide. The expansion will increase the number of telecom circles it operates in from 18 to 23.

Reports say Bharti Airtel may be getting a $7 billion, five-year offshore loan from banks to help fund its acquisition of Zain Telecom’s Africa assets. The remaining $2 billion is expected to come from the rupee market.