Prabhu also said that the Railways will set up an infra fund to raise long term debt. Not just that, funds will also be raised from multilateral agencies and assets will be monetised, not sold. And in a bid to raise more funds the minister has also hiked the freight rates for various sectors.
Suresh Prabhu has also vowed to improve the Railways operating ratio to an ambitious 88.5 percent in FY16, from a 91.8 percent estimated for the current fiscal. But the big question comes—will he be able to deliver on his promises.
In an interaction with CNBC-TV18 Abhaya Krishna Agarwal, Partner & PPP Leader – EY, Rajeev Jyoti, Chief Executive, Railway Business- L&T , Nalin Jain, Business Leader, South Asia – GE Transportation, and Rajeev Chandrasekhar, Member – Rajya Sabha, analyse the hits and misses of the Railway Budget.
Rajeev Chandrasekhar feels the minister has got the picture right as far as the transformation story is concerned. According to him, the Railways has always been a case of an entity requiring investment and requiring better operational management. He feels this Budget is really about investing and creating operational efficiencies.
"This Budget is really about starting a process of investing again in the Railways and transforming Railways from being this government monolith that has fooled itself into believing it is a welfare organisation into a much more nimbler, more efficient commercial organization," he said.
Rajeev Jyoti of L&T feels that on a bottomline the number of Rs 1,00,000 crore investment is a very good.
"We need to have the ability to consume that number and which is the execution concept. Having said that, I would say that I see a good support from the government, which is also fighting its own fiscal battles, to look at Indian railways as a vehicle to kick-start the economy and therefore the fact that they have given them significantly higher budgetary support is a corroboration of the fact that they want Railways to invest," he said. However, he feels execution is the key.
"While the minister has been underlining the fact that he needs the government which is measured on indexing, which is measured on productivity and performance, he is trying to look at audits of all systems including accounting systems. However finally there is also a mindset, there is also a working ethos which needs to be transformed and that is what one will see in him as a leader that is he delegating, decentralising and yet controlling to see that the projects are executed in the right manner," Jyoti said.
Nalin Jain of GE Transportation thinks there is enough in the Budget to indicate an overhaul in the system. According to him, the two areas on which Prabhu has talked a lot are around transparency and governance. "We would see some changes. He (Prabhu) has not spelt out how he is going to do that but I do believe that this is a step in the right direction," he said.
On restructuring of the Railway Board, Jain said he does not feel the government is developing cold feet right now as because Prabhu has not said that he is not going to restructure. "You cannot bring transparency; you can't bring good governance without changing things so that maybe an outcome which will be the catalyst," he said.
Discussing viability, Abhaya Krishna Agarwal of EY said there are four elements of sustainability. One of course being investment, tackled by the minister. "There are three four more elements; one is of course the extra farebox revenue which other railways have about 15-30 percent revenue, while we have only 2-5 percent. So, there is lot of work needs to be done because you cannot totally depend upon increasing the freight and passenger will remain a holy cow," he said.
According to him, there is a large legacy issue of 10-15 years, which cannot be phased overnight. "The Railway is in such a situation in terms of safety, investment, ability to carry freight as all high density network is completely saturated, that the priority should be on restructuring, tinkering with the organisation or making it more viable," he added.
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