Having done a pre-Budget hike of 14.2% in passenger fares and raising freight rates, Railway Minister Sadananda Gowda's will present his maiden Rail Budget amidst expectation of big ticket announcements, such as high speed railway projects and station infrastructure improvements through private partnership.
Railway Minister D.V. Sadananda Gowda is expected to propose steps to boost revenues as the Indian Railways is saddled with a huge cash crunch of Rs 26,000 crore, amidst a decline in the growth in passenger earnings. Though, Modi Government's pre-budget decision to hike passenger fare by 14% may give additional revenue of Rs 8000 crore annually, some more strategies will be unveiled to mobilize alternative sources of funding to modernize and upgrade the crucial logistics sector.
The railway is likely to spell out strategy to earn additional revenue to reach the target in the current fiscal. It may also announce some new projects on priority basis in the Rail Budget 2014-15 and some bold plans to improve the service that transports 23 million Indians every day.
With government grappling with ever-increasing fuel cost, harnessing alternative energy like solar power and bio-diesel in a big way is likely to feature in the NDA government's first Rail Budget as it is believed to be the vision of Prime Minister Narendra Modi, who wants use of non-renewable energy in rail sector to ensure lower dependence on fuel.
Importantly, budget is likely to spell out the plan for having a “Diamond Quadrilateral” connecting the metros with high-speed trains as cited by the prime minister. However, the need for funding such projects may force the government to open the doors for private and foreign funds participation in the segment.
Additionally, the budget is expected to bring in fiscal stability in the railways by sticking to the recent hike in fares and fund inflows for modernisation of infrastructure development through public private partnership (PPP) models.
Besides, Gowda, in his maiden budget, might also announce 100% FDI in areas such as high-speed train systems and dedicated freight lines and a more investor-friendly PPP model. However, Union Home Ministry has raised objections against any such proposal, citing that it might affect the security of such a large transportation network.
Previously, in the interim budget, Mallikarjun Kharge, the then railway minister, had set a revenue target of Rs 1.65 lakh crore that included Rs 1.06 lakh crore from goods tariffs and Rs.45,255 crore from passenger fares, and the balance from coaching and other sources.
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