NDA Government Presents Its First Rail Budget

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Railway Minister Sadananda Gowda began presenting the Narendra Modi government’s first Rail Budget today, with an acknowledgement of the enormity of the task he faces to revamp the mammoth Indian Railways.

He stated his intent to make the Railways the biggest freight carrier in the world and pointed out that the Indian Railways carries more than the entire population of Australia in a day.

He is expected to suggest a bigger private sector role in developing the Railway in his budget, traditionally regarded by economists as setting the stage for the Union Budget, to be presented on Thursday, in which the ruling BJP government will lay out its economic reform plans.

Prime Minister Narendra Modi last week said in a speech he hopes for more private sector money in modernising the railways, still the main form of long-distance travel for most of India’s population. “We want the railway stations to have better facilities than airports. This is our dream,” said Mr Modi. Mr Gowda is expected to announce more public-private partnerships in railway infrastructure.

“You will see a change in near future,” Mr Modi had promised, adding that “private parties would also be ready to invest because this is a good project economically and will benefit everyone.”

Mr Modi’s BJP, which took office in May after scoring a landslide election win, has also said it favours a greater role for private business in building other infrastructure such as roads and ports. But the BJP has said modernisation of the decrepit and over-burdened train network tops its ambitious agenda for infrastructure-building in the country.

Dilapidated transportation has held back growth of Asia’s third-largest economy, analysts say.
To help fund new wagon purchases, modernise track, revamp lines and improve safety, the government hiked passenger fares by 14.2 percent and freight rates by 6.5 percent — 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.
The economy is growing by just under five percent annually, far below the near double-digit pace of a few years ago.

Finance Minister Arun Jaitley underlined Monday in parliament the government’s determination to go ahead with difficult belt-tightening decisions, saying “for any public utility to run, the users must pay”.
The government has also suggested it may open up the railway to foreign investors, and analysts will be looking for any suggestion of such a move in the rail budget as a sign of desire to welcome more outside investment.

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

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)

Courtesy: NDTV

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