Railway Budget 2014 : Modi Government to Present First Rail Budget Today

At noon on Tuesday, Railway Minister Sadananda Gowda will present the Narendra Modi government’s first Rail Budget, which is traditionally seen to set the stage for the union budget – to be presented on Thursday and in which the ruling BJP will lay out its economic reform plans.

Finance Minister Arun Jaitley underlined in parliament on Monday the government’s determination to go ahead with difficult belt-tightening decisions, saying “for any public utility to run, the users must pay”.

Experts expect some tough decisions from the rail budget; the Modi government is expected to push for higher fares and freight charges and bold plans to revamp the Railway system.

The government is expected to announce more public-private partnerships in Railway infrastructure. Prime Minister Narendra Modi said last week that he hopes for more private sector money in modernising the railways. “We want the railway stations to have better facilities than airports. This is our dream,” Mr Modi has said.

Mr Gowda had said, after assuming charge, that his focus will be on safety, security and speed. So, the budget is expected to focus on providing better amenities to passengers including an improved catering service on the railways, still the main form of long-distance travel for most of India’s population of 1.2 billion people.

Mr Modi and his team need to find a sustainable fix to the funding crunch facing the railways, and there are suggestions that it could open it up to foreign investors, a move resisted by the railways in the past.

The BJP has said modernisation of the decrepit and over-burdened train network tops its ambitious agenda for infrastructure-building in India. Dilapidated transportation has held back growth of Asia’s third-largest economy, analysts say.

Analysts say as much as $500 billion, or nearly Rs. 30 lakh crore, must be invested over the next decade to overhaul the Victorian-era network.

To help fund new wagon purchases, modernise track, revamp lines and improve safety, the government had recently hiked passenger fares by 14.2 per cent and freight rates by 6.5 per cent — the steepest rise in 15 years and a politically controversial move. A public outcry saw the government later partially climb down over city commuter fare hikes, underscoring the difficulty in reducing subsidies in a tough economic environment.

Defending the hike, Arun Jaitley yesterday accused the previous Congress-led UPA government of running the mammoth Railways into deep losses. He pointed out that the railways makes a Rs. 30,000 crore loss only on passenger fares and said India’s arterial transport would have come to a standstill if the issue of fares was not addressed.

In the union budget, Mr Jaitley is expected to press forward with fuel price rises as part of efforts to curb subsidies. India’s subsidies on energy, food and fertiliser total some Rs. 2.6 lakh crore annually. ($1= Rs. 60)