This years railway Budget has emerged like train whose destination is far off and it would long

time to reach there. Hence, many experts believe that there would not be immediate allocation of funds for companies in various sectors that cater to works related to the Railways. Here is a detailed analysis of the measures and its implications: Measures Measures given in this years railway budget are lucrative when considered from a long span of time. This year the railway budget has allocated highest outlay of Rs63363 crore for FY14. This would be met through gross budgetary support of Rs26000 crore, Railway Safety Fund of Rs2000 crore, Internal Resources of Rs14260 crore, market borrowing of Rs15103 crore and East Bengal Railway-Public Private Partnership of Rs6000 crore. In addition to this, the Budget has kept the gross traffic receipts for FY14 at Rs142742 crore. The gross traffic receipts for FY13 were at Rs125680 crore. Interestingly, the railways had several long-term measures which concentrated on improving its operating ratioit is a measure of efficiency in control the operating expenses and is usually used for sectors that require substantial portion of revenues to sustain and maintain operations. In railways, an operating ratio of 80% or lower is considered reasonably well. There are measures, which speak volumes of the commitments of the railways to this financial parameter. Here are a few them: a) Concerning railways The Budget has revised the freight loading target to 1007 MT against 1025 MT in Budget Estimates in FY13. For FY14, freight loading target has been increased by 40 MT to 1047 MT. It proposes to target to improve Operating Ratio to around 87.8% in FY14. The railways had successfully reduced its operating ratio from to 88.8% in FY13 from 94.9% in FY12.

The Budget pointed out at an excess remaining as regards dividend liability for the current year is pegged at Rs 10,409 crore as against the budget amount of Rs 15,557 cr. The Budget hopes to end 2013-14 with a balance of Rs 12,506 crore and with Rs 30,000 crore in 2017. The Budget has estimated freight earning target at RS93554 crore for FY14.,up by 9% on a year on year basis. It is estimated that the number of passengers would increase by 5.2% in FY14. The railways has targeted revenue of Rs42210 crore. It has a target of Rs1000 crore each fixed for Rail Land Development Authority and IR Station Development Corporation. This amount would be raised through Public Private Partnership in FY14 It has proposed a new fund named Debt Service Fund to meet committed liabilities of debt servicing. The Planning Commission has aimed the Railways 12th Plan at Rs5.19 lakh crore with a Gross Budgetary Support of Rs1.94 lakh crore, internal resources of Rs1.05 lakh crore, and market borrowing of Rs1.20 lakh crore, with another Rs1 lakh crore expected to be raised through public private partnership route. b) For commuters There is a proposal formulated for setting up of Railway Tariff Regulatory Authority. It is at inter-ministerial consultation stage. Fuel Adjustment Component (FAC) linked revision for freight tariff to be implemented from 1st April 2013. An across the board hike in freight charges by an average of about 5.8% has been made. Reservation fee for AC first class and executive classes has been raised to Rs60 from Rs 35 and that of first class and AC- 2 doubled to Rs50.

 Reservation fee for AC chair car, AC-3 economy and AC-3 tier has been increased to Rs 40 from Rs25. Supplementary charges for superfast trains have been increased between Rs5 and Rs 25. Tatkal charges for sleeper class raised by Rs15 to RS25 and for AC Chair car from RS25 to RS50. Tatkal charges in AC-3 tier increased by Rs50; AC-2 tier and executive class by RS100. Cancellation charges increased for all classes between Rs5 and RsS50. The Budget expects that fare revision would raise the railways revenues by Rs6600 crore in FY14 Implications For major sectors, the railway Budget is nothing to cheer about especially when considered from the point of view of FY14. All proposals have strong advantages in the long-term. One of the chief reasons for this is long-term targets by the Railways Budget is lower revenue growth. The low growth in revenues has compelled the railways minister to set lower targets for the next year. It has focussed on aspects such as safety, up gradation of lines and freight corridors rather than traditional points like wagon procurement and addition of new lines. An economic slowdown has triggered lower than estimated freight loading for the Railways this year. As a result, the railway minister has this time set a realistic 4% rise in freight loading for FY14. In the previous Budget, the railway minister had increased passenger fares and freight-loading target. By taking into account these parameters, the railway minister had targeted for an operating ratio of 84.9%. However, a partial roll back of fares and increase in fuel cost led to a revised operating ratio of 88.8%, which was still better than 94.9% operating ratio in FY12. In the coming financial year, the railway

minister has targeted an operating ratio of 87.8%. This seems to be realistic and can be achieved given the fact that the minister has taken into account modest calculations. For FY13, in the wake of high operating ratio, the railways had to bring down its targets for laying new lines from 700 kms to 470 kms. In the current Budget, it has pegged a more realistic target of 500 kms of new lines. Interestingly, this time, the railway minister proposed one of its kind initiatives this year. He has introduced Fuel Adjustment component for freight traffic. This initiative would mean that any change in fuel price (going up or down) would be passed on to the travellers. For cement companies, this would mean that their margins would be volatile given the fact that logistics form an important part of their business. For sectors such as metals and fertilizers, the impact of these measures would be marginal. The Budget has allocated small amount of funds for rolling stock. Rolling stock means procurement of wagon, locomotives and coaches. In the current Budget, only Rs 44 crore is pegged for new orders of wagons. This is a big negative for wagon procurement companies. Construction companies on the other hand have reasons to be upbeat about the railway Budget. The government would award construction contracts of up to 1,500 km lines on both the dedicated freight corridors in this financial year. In addition to this, to tap into the lucrative freight income from coal, port and iron ore, it plans to investment of nearly Rs 9000 crore through public private partnership. Besides, the Budget has planned 60 more stations, which would be developed as Adarsh stations. This target is lower than the last years Budget target of upgrading 84 stations. For construction companies, which have been battling with fewer orders as orders from various sectors have depleted, this would be a breather. On the whole, the measures mentioned in the railway Budget are longterm. Hence, an immediate benefit on the corporate side of the railways business would not be seen. However, measures related to travellers, as usually observed, would be implemented without fail.