business

Updated: Feb 27, 2015 00:12 IST

The government unveiled a reformist railway budget on Thursday focused on modernisation of the creaky colonial-era network and massive investment aimed at making the railways more passenger-friendly without increasing fares.

Presenting the railway budget just two days before the BJP-led government delivers its first full annual budget, railway minister Suresh Prabhu said it "set the direction of a long and difficult road of reform".

Shedding the populism of the past, the rail budget demonstrated the Modi government’s intent to turn the cash-strapped public transporter into a modern enterprise with a host of facilities such as more high-speed trains, Wi-Fi at 400 stations, CCTVs in trains for women’s safety and easier norms for unreserved tickets.

It also increased investment in the stretched railways to over 8 lakh crore over the next five years after decades of under-investment that has taken its toll on the world’s fourth-largest rail network struggling to cope with slow services and frequent accidents.



Fresh investment will focus on improving and expanding existing railway lines, many of which are operating at more than full capacity, with the average speed of the country's best trains a sluggish 70kmph.

"I have not increased passenger fares. We are directing our efforts to make travel on Indian Railways a happy experience with a mix of various initiatives," said Prabhu, a chartered accountant-turned-politician who was handpicked by Prime Minister Narendra Modi to head the railways.

"Railways facilities have not improved substantially for the past few decades which is the result of under-investment that affects capacity, leading to poor morale. This fed into a vicious cycle of chronic under-investment for a long time … This must be put to an end," he said. "We have to make Indian Railways a benchmark organisation in safety, security and infrastructure."

Reform in the railways that provides jobs to around 1.3 million people has always been politically sensitive and rail budgets in the past have been more populist aimed at wooing politically-significant constituencies.



While Prabhu vowed to modernise exisiting services, he also hiked freight rates for cement and coal by up to 10% and did not announce any new trains in the budget, unlike the past when governments rolled out new services to garner political support.



Congress leader Mallikarjun Kharge and the TMC's Dinesh Trivedi, both former railway ministers, slammed the budget, saying it lacking in substance and was merely “weaving dreams”.



"It's a nicely-worded budget speech. But there is no vision as to how he is going to achieve goals. The minister says he will get into PPP model, BoT agreements, etc. If you depend on others, you are unlikely to meet your targets," Kharge told reporters outside Parliament.



Addressing the pressing issue of finances for the railways, Prabhu proposed an operating ratio below 90% to increase revenues for the system.

The railways’ operating ratio, which has been consistently above 90% for the past five years, suggests how much money is spent on day-to-day operations to earn revenues, giving an indication of the funds left for safety and expansion.

While a ratio of 93% means it saves just 7 paise on every rupee it earns from operations, the latest rail budget comes at a time its finances and efficiency are under severe strain.

Globally, a figure of 75-80% or lower is seen as a healthy benchmark, but India ranks among the worst networks on this count.

Highlights from Suresh Prabhu's budget speech

(with inputs from agencies)