[aurangabad_ca] 2010 Railway Budget Analysis
2010 Railway Budget Analysis
Focus of Railway budget seems to be on controlling inflation
The Railway budget announced today seems to be an extension of
governments efforts to curb inflation. In the budget, government has
reduced freight rates by Rs 100/wagon on food grains and kerosene to
indirectly reduce the food prices which has been increasing rapidly
over last few months and has become a major cause of concern. We can
expect more of such measures in the coming unionbudget on 26 February
2010. This also explains the sudden positive movement of stock prices
of food companies like KRBL, Kohinoor Foods. Moreover, by not
increasing the freight rates government has further given a signal
that it is a more concern about inflation.
Addition of 1000 km new lines in one year
Since 1956 railways added on an average of 180 route km per year to
take 53,596 km of railway connectivity to 64015 km, which is dismal
compared to global average. Thegovernment has realized this now and is
taking positive steps by planning to complete 1000 kms new lines in
next one year. The government has taken more aggressive steps by
setting a target of 25,000 km new lines over next
10 years. This is expected to benefit all the railway companies in
general and Kalindee Rail and ARSS infrastructure in particular.
Vision 2020
For the first time in the Indian Railway history, government has taken
initiatives to set long term goals under the program 'Vision 2020'.
Under this program government will achieve short term (1‐2 years),
medium term (5 years) and long term targets (10 years). To do away
with administrative bottlenecks, thegovernment plans to set up a Task
Force to ensure a 100‐day clearance for investment proposals
Lack of Government's intention towards complete privatization
Government has announced a few projects in which they are taking the
PPP route. However, government has clearly mentioned that it does not
intend to privatize railway sector. Some of the projects to be started
through PPP route are
- To develop multilevel parking complexes through PPP
- To set up five state‐of‐the‐art wagon factories in JV/PPP mode which
will help Railways meet the transportation demands of the economy
Government emphasis of setting up 5 factories through JV for wagon
manufacturing has given a
negative signal to wagon manufacturers which led to a sharp fall in
stock prices of some of the players
like Titagarh Wagons and Texmaco.
Revival of Wagon Investment Scheme
Ministry has announced to introduce a modified wagon investment scheme
for high capacity general
purpose and special purpose wagons. It will also cover iron ore, coal
and cement. Government
initiated such scheme in 2006 but discontinued it in later years. This
scheme if implemented will help
the revival of demand for new wagons from private companies.
Initiatives taken in Railway Budget & Stock Impact
1. Completing 1000 km of new lines in one year = +ve impact for
Kalindee Rail, ARSS Infra
2. Using radio frequency identification (RFID) technology in freight
transport (already existing) = Neutral impact for Batronics, Gemini
Communications
3. Increasing safety through spending on anticollision = +ve impact
for Kernex Microsystems
4. Reduction of freight rates by Rs.100/wagon on Food grains and
Kerosense = +ve impact for KRBL, Kohinoor Foods
5. To acquire 18,000 new wagons in one year (last year also 18,000
wagons) = Neutral impact for Texmaco, Titagarh Wagons, BEML, Steel
companies
6. Development of Western and Eastern Corridor = +ve impact for
Railways related companies
7. To construct 93 multi‐functional stations = +ve impact for
Construction companies
8. No change in freight rates = +ve impact for All companies in general
Apart from policy initiatives, the key aspect will be to implement
these policy measures
Key Budget Highlights
- Gross Traffic Receipts projected to be Rs. 94,765 Crs for FY 2011 as
compared to Rs. 88,356 Crs (revised) for FY 2010
- Excess (Surplus) projected to be Rs. 3,173 Crs for FY 2011 against
Rs. 951 Crs (revised) for FY 2010
- The target for freight loading for FY 2011 has been kept at 944 mt,
an increase of 54 mt over the revised figure of 890 mt for FY 2010.
- Reduced freight rates by Rs 100/wagon on food grains and kerosene
- To construct 93 multi‐functional stations
- Will flag off 117 new trains as planned. Gauge conversion will help
attain the target of 120 new trains in total
- To complete 1000 kms new lines in next one year
- Plan to introduce Vision 2020
- To acquire 18,000 new wagons in next one year. There is no year over
year increment in this target
- To start 6 bottling plants for providing clean drinking water
Vision 2020
-Railways to come out with 10‐year plan 'Vision 2020'
- Vision 2020 aims at adding 25,000 route km to the railway network
- Will follow public private partnership model in projects
- Special task force will be set up clear business projects within 100 days
Other Highlights
- Policy decision to employ one member of family whose land is
requisitioned for railway projects
- Integral Coach Factory Chennai to be further modernized
- New wagon repair shop in Mumbai
- Design, development and testing centre for railway wheels at Bangalore
- To launch double‐decker trains and to introduce mobile ticketing vans
- Railways will provide houses to all its employees in the next 10
years in collaboration with the Urban Development ministry.
- Railways will be a lead partner for Commonwealth Games. Will run
special trains
for Commonwealth Games
- Railways to run a special train to Bangladesh on the 150th birth centenary of
Rabindranath Tagore
- Separate unit to be created within the railways to spearhead
implementation of projects
- New anti‐collision devices, better traffic signaling systems along
880 kms of track
- Out of 17,000 unmanned crossings 3000 unmanned crossings to be
manned this year and 1000 in next year while remaining 13,000 will be
manned within five years to avoid accidents.
--
Regards,
Parthiv Mehta
Go Green
P Please consider the environment before printing this e-mail. 1 ton of
paper = 17 trees. Reduce. Reuse. Recycle.
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