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April 04, 2017 @ 01:15 PM

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April 04, 2017 @ 01:15 PM

Ramifications of Railway Budget 2014

MBA Aspirants are expected to know and understand the implications of Budgets because of immediate effect on our economy and common man.
Read:  Ramifications of Railway Budget 2014
A budget in an election year is always something to watch out for. The interim railway budget was presented by Union rail minister Mallikarjun Kharge in Lok Sabha on Febrauary 12, 2014. The real breakthrough in this railway budget was the introduction of  new pricing regime through a transparent process.
The constitution of an independent Rail Tariff Authority (RTA) to advise the government on fixing of fares and freight was announced in this budget. The Authority will not only consider requirements of the Railways but also engage with all stakeholders to usher in a new pricing regime through a transparent process.
The RTA is expected to lead an era of rationalization of fares and freight structures for improving the fare-freight ratio and gradually bringing down cross subsidization between different segments.
According to Railways, this would go a long way towards improving the financial health of the national transporter which will lead to growth to match expectations of the nation and provide stability by minimizing volatility of market condition. 
Anticipating healthier economic growth, the Railways has targeted a record Rs 1.6 lakh crore in revenue for the next financial year, while no increase has been proposed in passenger fares and freight rates. On the investment front, the Annual Plan for 2014-15 envisages investments of Rs 64,305 crore. The Budget Estimate for 2013-14 was Rs 63,363 crore and the Revised Estimate was Rs 59,359 crore.
From the above numbers, it is clear that the railways needs to borrow to run its operations through Gross Budgetary Support, Internal Generation of Railways and Market Borrowing.. For that, budgetary support from general revenue has been proposed at Rs 30,223 crores. 
Besides that, Indian Railways will borrow Rs 13,800 crore from market through its two companies IRFC and Rail Vikas Nigam Ltd for capital expenditure during 2014-15. Indian Railways Finance Corporation (IRFC) will raise Rs 12,800 crore in 2014-15 for investment in rolling stock and projects. Moreover Public Private Partnership (PPP) route will be used to mobilise Rs 6000 crores.
On the user – friendly front, new things have been done. Giving importance to the role of information technology in rail operation, a series of steps including SMS alert and online booking of meals in trains has been announced.
From now on, waitlisted passengers will get automatic PNR status update once their tickets get confirmed. Train running information system will be installed at rail premises to facilitate dissemination of information about trains on real time basis. Online booking of meals on trains for selected enroute stations and introduction of electronic transmission of railway receipts for freight customers has been ensured.
High Speed Trains is an impending issue and for that a lot of measures have been announced. A joint feasibility study by India and Japan for Mumbai – Ahmedabad Corridor will be done that will be co-financed by Japan International Cooperation Agency. Moreover, a Business Development Study by SNCF for Mumbai – Ahmedabad corridor will also be done. The option of Semi- High Speed Projects will also be studied by the railways this year. Also the railways will explore the low cost option of speeds between 160 to 200 kmph on select routes.
Indian railways are in urgent need of holistic reforms. Isolated measures that are far and few cannot solve the impending problems of railways. Hopefully the new government shall bring in the much needed reforms to improve its performance and catch up with countries like China.
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