11 Jul, 2014

Long term approach seen in maiden rail budget of Modi Sarkar

Up gradation of Indian railways to international level was motto of Railway Minister DV Sadananda Gowda who presented his maiden budget on Tuesday. Gowda chose to show the impressive road map ahead. It was prepared keeping in mind of Modi’s thought of process of high quality infrastructure for the betterment of economy as well as raising the life standard of human being.


Bullet trains were the major attraction among budget. India is third largest economy in world on purchasing power parity basis but lacks massively in quality rail network and services. So bullet trains will give space of improvement. First bullet train will run on Ahmedabad-Mumbai corridor as studies have been done on it. Bullet trains will form Diamond Quadrilateral network by joining metro cities and economic hubs.

Digitization will be done in Railways sector & Wi-Fi will become operative in category trains. Stations will be updated. All this is going to be done through PPP model. New ports & mines will be connected through rail network which will decrease the cost and will increase the capacity & speed of transfer of different resources. Adani ports and other such companies will be benefitted from it. Also auto closing of doors of trains is being planned which is passenger friendly decision.

Govt. will do agreements with few companies for some specific projects. Auro-water will be used on stations and in rails. For increasing the supply of milk agreement with Amul will be done and trains will be started to increase the supply of milk. Solar panels will be installed on stations which may benefit the Moserbaer.

Govt. tried to give new direction to rail budget as earlier most of budgets were on incremental basis without any focus to increase the quality of sector. But Gowda failed to give specifications on different projects and timeline of projects has also not been discussed. It resulted into pessimism in the markets as most of railway sector stocks fell by 5% or more. Major index NIFTY also derailed & fell over 2% on budget day which is largest single day fall in last 10 months. India Inc was expecting more from Modi Sarkar so they are not happy the ways railways budget has been presented. Also, FDI in sector is on hold and when govt. will bring the bill when will it pass is still unknown.

India lacks in resources, under such condition, it is good budget for long term as it is strategic budget not incremental or from short term perspective. FDI in sector will bring capital the sector needs massively. Railway sector has the capacity to improve the economy over 1% & the direction now railways sector is going in, we may see it happen in coming period.

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