Wednesday, March 14, 2012

Rail budget 2012: First fare hike in 10 yrs

In his maiden Railway Budget speech, Union Railway Minister Dinesh Trivedi proposed to hike fares for the first time in ten years. The Railway Ministry has been reluctant to hike fares since 2004, when the UPA came into power.

Rail passenger fares are highly subsidised . In 2008-09, even the high-end first and second air-conditioned passengers did not pay fully for the services. Only passengers availing the AC three-tier services and AC chair car services covered their operational costs.

Trivedi said this year would be dedicated to increasing safety measures in the Indian Railways and would therefore proposed to set up a Railway Safety Fund of Rs 16,800 crore. He aims to reduce deaths by railways to zero, enhance safety protocols. More than 40% of accidents involving 60-70% casualties occur at unmanned crossings, Trivedi said and therefore the ministry aims to eliminate all level crossings in five years.
Trivedi proposed introduction of an Independent Railway Safety Authority and said the Ministry would set up a railway research and development council. 
I have two options; either to keep the Railways in a status quo position or to bite the bullet, the railway minister says. I have a Himalayan task of running the railways, he adds. A sum of Rs 14 lakh crore (Rs 14 trillion) is required in the next decade for this sector. The twelfth plan investment will be increased to Rs 7.35 crore from Rs 1.92 lakh during the eleventh plan, he proposed.The railways have sought as much as Rs 40,000 crore of budgetary support from the government this fiscal, double the money it had demanded just a year earlier.
The areas of focus are safety, consolidation, decongestion and augmentation, and modernization, Trivedi announced.
In his budget announcement, Trivedi sought atleat 10 per cent of the infrastructure spend to be allotted to the Indian Railways. The Indian Railways have a large basket of pending projects, Trivedi said and these projects remain incomplete due to lack of funds.
Railways must grow at 10 per cent in order to sustain the GDP growth Trivedi said. He pegged the Annual Plan Outlay for FY13 At Rs 60100 crore versus Rs 57630 crore (YoY). This is the highest-ever planned outlay by the railways.
The railways' plan to induct around 1,50,000 employees in Groups C and D is already expected to push its wage bill further up by around Rs 2,000 crore.  The railways spent around 42% of their earnings in wages and allowances and another 17% in pensions in 2009-10.

The Railway Minister announced a fare increase of 2 paise per km for suburban and ordinary second class in a passenger train, 3 paise per km for second class in the mail express trains , 5 paise per km for sleeper class, 10 paise per km for AC chair car, AC three tier and first class, 15 paise per km for AC two tier and 30 paise per km for AC first class. He also proposed to increase platform ticket
rates from Rs 3 to Rs 5.

Patients traveling in AC coaches will get a 50 per cent discount, the railway Minister said. He also proposed to set up an independent railway tariff authority.


Trivedi said that Rs 39,110 crore will be allotted to mordernise signaling cost and will spend Rs 63,212 crore on track modernisation in the coming 5 years. Installation of 321 escalators at important stations, book a meal and SMS facilities for e-tickets also feature in Trivedi's mordernisation plans.NEW STATIONS
The Railways Budget has proposed to develop 100 new railway station via the PPP route in the next fiive years. He also proposed development of major stations which would create 50,000 new jobs.

The Railway minister proposed to complete over 45 new lines that will stretch over 700 kilometers in the current year and a fund of Rs 6,870 crore will be allotted in order to build these new lines.

The Railway Minister announced 75 new express trains and 21 new passenger trains in his Railway Budget speech.

There's good news for commuters; Trivedi proposed setting up of alternate train accommodation system to accommodate waitlisted passengers. He also announced that the speed of passenger trains will eventually be increased to 160 km per hour.


Cleanliness has alway been an issue with the railways, and the otherwise deficient railway has been maligned to to it's hygiene issues. Tivedi therefore proposed to improve the standard of hygiene and cleanliness in the next six months by setting up of of housekeeping staff and creating 'eco toilets', while vacuum toilets will be fixed on a few premium trains

Rail Stock Reaction
Rail Stocks Gainers:
Texmaco (+3.49%),
Bartronics (+2.46%),
L&T (+2.28%),
Gateway Distriparks (+1.42%),
Kernex Micro(+1.19%)

Rail Stocks Losers:

GMR Infra (-2.28%),
Stone India (-2.16%),
HCC (-2.05%),
IVRCL Infra (-1.46%),
Titagarh Wagons (-1.42%)

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