While the Railway
Budget 2014 - 15 talks about India trying to be the largest freight carrier
globally & identifies alternative funding requirements to achieve this
target, it does not state a clear strategy to meet these requirements, says
India Ratings & Research (Ind-Ra).
Alternative ways
proposed to finance railway operations include encouraging private sector
participation through public-private partnerships, leveraging railway public
sector undertaking resources & allowing foreign direct investment (after
Cabinet approval) in the rail sector.
The passenger &
freight tariffs were raised in June 2014 and the budget estimates operating
surplus to increase to 9.1 % in FY15 (FY14: 6.5 %).
Two proposals of the
rail budget - transporting fruits &
vegetables by air conditioned trains & milk by special milk tankers
- can provide some comfort in controlling runaway food inflation.
Another area that
received attention was connectivity to the North-Eastern region.
Despite acknowledging
the fact that growth of the sector depends heavily on the availability of funds
for investment in rail infrastructure, borrowing by the Indian Railway Finance
Corporation Limited is pegged at only Rs.11790 Crore.
Ind-Ra believes for
large infrastructure projects with a long gestation period, public equity along
with strong supervision & control is the best alternative.
We believe the
announcement of bullet trains and diamond quadrilateral for high speed trains
are all statements of good intent and will take a while to come true.
Contacts
Mr. Devendra Kumar
Pant
Chief Economist
+91 11 4356 7251
India Ratings &
Research Pvt Ltd
601 – 609,
Prakashdeep Building
Tolstoy Marg
New Delhi – 110 001
Sunil Kumar Sinha
Principal Economist
+91 11 4356 7255
Media Relations:
Saraanya Shetty,
Mumbai, Tel: + 91 22 4000 1729,
E- mail:
saraanya.shetty@indiaratings.co.in.
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