Indian Railways Budget 2016-17 : Improvements in transparency and search for new sources of funding

“Rail is not just a mode of transport; it is an engine of India’s growth, … Through the railways, we want to take the country to new heights.”

        Narendra Modi

July 9, 2014

Almost two years since Modi’s aspirations for the Indian Railways (IR), the second Railway Budget was announced on February 26, 2016 by Union Minister, Mr. Suresh Prabhu. Right in the beginning, Prabhu outlined that the ‘Reorganization, Restructuring and Rejuvenation’ of the Indian Railway was all centered around improving the experience of the common man. The budget revolves around innovation, digitizing customer service, transparency, new modes of revenue and infrastructure, and an environmentally friendly vision for the future of the “backbone of India’s progress and economic development.” Some ministers like former Railway Minister Laloo Prasad Yadav, shared their disapproval of how BJP “has derailed the lifeline (IR)” of India. However, Mr. Modi, along with other ministers praised the budget, some calling it “visionary” yet “realistic.”

One of two components that stands out is to find more sustainable and novel sources of revenue for the Indian Railway. Prabhu’s budget aims to fund the capital expenditure without increasing passenger freight rates. Instead of increasing rates, he has resorted to finding new avenues for revenue growth and funding through institutional financing, international bonds and inviting private partnership to participate in investing in the Indian Railway. Prabhu shared the example of LIC, an insurance company, that is providing 1.5 lakh crore over the next five years for various projects. In addition to approaching new external sources of funding, Suresh Prabhu focused on savings from electrifications. The 2000 km of the proposed track would not only be environment friendly but savings from it would also be used to fund the capital expenditure. His budget not only focused on pure growth, but sustainable growth.

The second component of the budget is its ‘common-man centric’ highlights. Transparency in customer service with modern infrastructure, empowerment and assistance for vulnerable populations and acceleration employment opportunities are key measures that Prabhu intends to undertake. He took the pledge of “100% transparency” in all its operations. Prabhu said this includes “online recruitments,” “procurement of works,” “paperless contract management system” moving online to digital platforms on a “Pan-India” basis next financial year. This was asserted with high dependence on use of technology and developing infrastructure to support transparency. The Indian Railway under Prabhu is mastering redressing complaints and getting feedback through social media. This social outreach is coupled with a promise of commissioning “Wi-Fi services at 100 stations this year and at 400 more stations in the next 2 years.” These are bold new moves that Mr. Prabhu has proposed to improve customer service. He was very emphatic in sharing that this budget belongs to the common man.    

This budget has not overlooked vulnerable populations.The railway minister unveiled trains for passengers travelling in the unreserved categories, coaches with potable water and mobile charging ports. Porters will not be called ‘coolies’ and will be trained in soft skills that will allow them to be able work in other sections of the Indian Railway. The Indian Railway minister further proposed that poor farmers be allowed to cultivate food grains on railway land. Women and children have also been paid attention to; 33 percent of the reservation for commercial licensing for stalls in railway stations will be given to women, and there will be food for infants and young children available through a pilot program at the moment.  

With quite an ambitious agenda, the man behind the Indian railways has a lot of work cut out for him for the coming year.

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