Home >Budget 2019 >Budget Expectations >What to expect from the Rail Budget FY21?
A forest guard signals for a train to slow down as wild elephants graze nearby at Panbari village, on the outskirts of Gauhati, (AP)
A forest guard signals for a train to slow down as wild elephants graze nearby at Panbari village, on the outskirts of Gauhati, (AP)

What to expect from the Rail Budget FY21?

  • The 92-year-old practice of presenting a separate rail budget came to an end from the 2017-18, with the finance ministry decided to merge it with the general budget
  • Finance minister Nirmala Sitharaman is expected to announce the roadmap for national transporter

Until 2016-17, railway budget used to be one of the most-awaited annual exercise when the government announced fare revisions, new trains and its vision for the national transporter.

The 92-year-old practice of presenting a separate rail budget came to an end from the 2017-18, with the finance ministry decided to merge it with the general budget.

On Saturday, Finance minister Nirmala Sitharaman is expected to announce the roadmap for national transporter, which will include the process of a capacity enhancement, modernizing infrastructure, along with prioritizing safety. Six new high speed rail corridor, dedicated freight corridor, multitracking to enhance train running speed and private operators running passenger trains are top in the priority list.

In the last five years, capital outlay and budgetary support for the railways increased significantly in the past five years. However, investment has been sluggish.

The Union Budget had allocated 65,837 crore outlay for Indian for the financial year 2019-20, as the national transporter is undergoing massive infrastructure expansion. The capital expenditure has been increased to 1.60 trillion in 2018-19 from 1.39 trillion a year ago. The allocation is expected to increase, considering the government’s focus on productive expenditure such as infrastructure, amid a slowdown in the broader economy.

“It is estimated that Railway Infrastructure would need an investment of 50 lakh crore between 2018 and 2030. Given that the capital expenditure outlays of Railways are around 1.5 to 1.6 lakh crore per annum, completing even all sanctioned projects would take decades. It is therefore proposed to use Public-Private Partnership to unleash faster development and completion of tracks, rolling stock manufacturing and delivery of passenger freight services," Nirmala Sitharaman had said in July.

Another key thing to watch out for will be its operating ratio, which ratio measures expenses as a proportion of revenue or the amount spent on every rupee earned.

Finances of Indian Railways will remain stressed this fiscal as its operating ratio is unlikely to improve in the current fiscal amid dip in earnings.

Railways’ is eyeing an operating ratio of 95% in the current fiscal, down from 97.3% in financial year 2018-19. Freight earning, which has a direct bearing on the operating ratio has also been sluggish this financial year, due to fall in coal and cement movement, amid a slowdown in the economy.

The national transporter’s operating ratio has been a matter of concern in the last few years. According to a Comptroller Auditor General (CAG) report, operating ratio was at its worst, hitting a 10-year high of 98.44% in 2017-18.

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