Budget 2019-20 Speech: What the Finance Minister said on Railways

The Union Budget for Financial Year 2019-20 was presented today by Finance Minister Nirmala Sitharaman.

With the then Minister of Railways Suresh Prabhu agreeing to fold the Railway Budget into the Union Budget, less time and attention is dedicated to railway finances and policy in the Finance Minister’s Budget presentation speech than we would like to see.

This time, the Budget Speech mentioned Railways on several occasions. We examine these mentions and their implications:

Connectivity is the lifeblood of an economy. The Government has given a massive push to all forms of physical connectivity through Pradhan Mantri Gram Sadak Yojana, industrial corridors, dedicated freight corridors, Bhartamala and Sagarmala projects, Jal Marg Vikas and UDAN Schemes. While the industrial corridors would improve infrastructure availability for greater industrial investment in the catchment regions, the dedicated freight corridors would mitigate the congestion of our railway network benefitting the common man.

Finance Minister Nirmala Sitharaman in her Union Budget 2019-20 speech in Parliament

As part of the Government of India’s infrastructure push, the FM signals clear intent to develop alternatives to the Indian Railways to move goods and people across the country.

In the meantime, the Dedicated Freight Corridor is expected to be fully commissioned by 2021 end. Besides, doubling, tripling and quadrupling, signalling and electrification work across the Indian Railways network have been sanctioned all along key routes to enhance capacity.

With, air, inland water and road transport networks getting a big push alongside the Indian Railways’ network, the next decade should see significant capacity addition that keeps pace with the growth of the economy.

The New Metro Rail Projects for a total route length of 300 kilometers have been approved during 2018-19. Also, during 2019, about 210 kms metro lines have been operationalized. With this, 657 kms of Metro Rail network has become operational across the country.

Finance Minister Nirmala Sitharaman in her Union Budget 2019-20 speech in Parliament

Continuing to underline the government’s intent on transport infrastructure, the FM stated the performance on the execution of metro projects currently under construction in various cities.

17. India’s first indigenously developed payment ecosystem for transport, based on National Common Mobility Card (NCMC) standards, was launched by Hon’ble Prime Minister in March, 2019. This will enable people to pay multiple kinds of transport charges, including metro services and toll tax, across the country. This inter-operable transport card runs on RuPay card and would allow the holders to pay for their bus travel, toll taxes, parking charges, retail shopping and even withdraw money.

Finance Minister Nirmala Sitharaman in her Union Budget 2019-20 speech in Parliament

Another long-awaited and in-the-works move has been the integration of various forms of public transport in various ways. A key step in this direction has been the establishment of a common payments platform for users of public transport. This is expected to simplify payment of fares and encourage use of public transport.

21. It is estimated that Railway Infrastructure would need an investment of 50 lakh crores between 2018-2030. Given that the capital expenditure outlays of Railways are around 1.5 to 1.6 lakh crores per annum, completing even all sanctioned projects would take decades. It is therefore proposed to use Public-Private Partnership to unleash faster development and completion of tracks, rolling stock manufacturing and delivery of passenger freight services.

Finance Minister Nirmala Sitharaman in her Union Budget 2019-20 speech in Parliament

In another attempt to create fiscal space for expansion, the FM proposes the use of Public-Private-Partnership to raise finances to fund railway infrastructure. At 50 lakh crores, it remains to be seen how successful the approach will be in garnering cash in the current economic scenario.

59.  Indian Railways suburban and long-distance services do a phenomenal task in cities like Mumbai and smaller cities. Railways will be encouraged to invest more in suburban railways through Special Purpose Vehicle (SPV) structures like Rapid Regional Transport System (RRTS) proposed on the Delhi-Meerut route. I propose to enhance the metro-railway initiatives by encouraging more PPP initiatives and ensuring completion of sanctioned works, while supporting Transit Oriented Development (TOD) to ensure commercial activity around transit hubs. We are in the process of completing the dedicated freight corridor project that will free up some of the existing railway network for passenger trains.

Finance Minister Nirmala Sitharaman in her Union Budget 2019-20 speech in Parliament

In a welcome move, the FM signalled government’s intent to expand and modernize suburban railway networks through more investments. This should help improve the worsening road traffic conditions in various cities and help reduce commute times in the long term.

Until recently, suburban railway networks were considered an unwanted and unnecessary burden on Indian Railways. While Mumbai’s network grappled with extreme saturation and under-investment, networks in other metropolitan cities received even less and never became as critical to the city as Mumbai’s famed locals have. This was natural since suburban networks make heavy losses due to subsidized tickets.

Again, it remains to be seen where the money for these investments will come from.

75.  To make railway travel a pleasant and satisfying experience for the common citizen, we will launch a massive programme of railway station modernization this year.

Finance Minister Nirmala Sitharaman in her Union Budget 2019-20 speech in Parliament

Finally, the FM also mentions the on-going railway station modernisation programme that she says will be launched this year. This implies the government is likely to push in more funds and expand the programme further. The Indian Railways has already moved ahead with improvement of station areas over the past couple of years. Redevelopment of stations such as Gandhinagar and Habibganj is already well underway.

Because this is a Union Budget that deals with so much more, hoping for more information on railways in the budget speech might be expecting too much. Most allocations for 2019-20 for IR projects were already decided upon before the Vote on Account in February 2019.

We will know what material changes have been made once the latest Pink Book and other Budget related documents are out.

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