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Friday, 26 February 2016

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Railway Budget 2016: Indian Railways getting future ready

With a strategy to win back the lost market share, cost optimisation efforts in the face of a weak patch in the business cycle, and organisational initiatives to prioritise investment projects, one could have easily mistaken it to be a corporate business plan.

Today's Railway Budget was indeed corporate-like, clinically focused on the issues that are afflicting Indian Railways, the world's fourth largest rail network.Over the last few decades, railways was losing its competitiveness to alternate modes of goods transport due to high freight rates and congestion on most of the busy routes.
The Budget has started a journey to reverse that trend through its announcements of review of the freight tariff structure, direct long term freight negotiations with key partners and focus on improving connectivity to ports and speed of freight movement. That bodes well both for the industry and the railways.
Container trains with time table will be started on a pilot basis, which is the starting point of ensuring that freight trains also get equal priority as passenger trains.
Dedicated freight corridors, private freight terminals, opening of new siding, are well on track and the general direction of focus on projects seemed to be very strong.
The Minister has done a good job of keeping the Operating Ratio at 92% even with a large increase in the wage bill due to the Seventh Pay Commission.

Many innovative methods to reduce cost have been proposed, including significant energy savings in power and diesel. Also, significant non-tariff revenues are being targeted. The Budget appears to be focused on investments for future capacity building, helped by a generous term funding by LIC. 
Overall, it was a very customer and service oriented Budget, keeping a keen eye on balancing ends with means.

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