2014

## Railways Budget 2014-15 Key Highlights And Proposals

 Surplus is expected to decrease by 24% to Rs 6,064 
crore after dividends.  Operating ratio is projected to increase to 92.5% in 2014-15. 
 Total Revenue is expected to increase by 14% to Rs 
1,64,374 crore and total expenditure is projected to increase by 16% to Rs 1,49,176 crore in 2014-15. 
 In 2014-15, both passenger and freight traffic are 
expected to grow by 5%.  Gross traffic receipts are expected to increase by 14% to Rs 1,60,165 crore. 
 The Plan outlay for 2014-15 is Rs 65,445 crore which 
is a 3% increase from 2013-14. 
 The Ministry plans to create the Diamond 
Quadrilateral Network of High Speed Rail. 
 Strategic management initiatives include Near Plan 
Holiday approach (i.e., not taking up new projects), prioritising and completing ongoing projects. 

## Overview Of Finances

The Minister of Railways, D V Sadananda Gowda, presented the Railways Budget 2014 to Parliament on July 8, 2014.  In his address, he assessed the performance of Railways in 2013-14 and laid out his budget proposals for 2014-15.  The Ministry targets to become the largest freight carrier in the world. 

## Budget V/S Revised Estimate 2013-14 (Details In Appendix Ii)

As part of the Budget process, the Ministry includes revised estimates for expenditure and revenue for the current year.  Some of the key deviations in the revised estimates compared to the budget estimates in 2013-14 
are: 

 Total revenue in 2013-14 undershot budget estimates 
by Rs 2,458 crore.  
 Total expenditure overshot estimates by Rs 1,155 
crore. 
 The net surplus was lower by Rs 5,204 crore.  Appropriations to the Railways Capital Fund was 
lower by Rs 875 crore. 
 Operating ratio stood at 90.8% compared to the 
Budget Estimate of 87.8%.  Operating Ratio is the ratio of Total Working Expenditure to Gross Traffic Receipts; a higher ratio indicates a lower ability to generate a surplus that can be used for capital investments such as laying new lines, deploying more coaches etc.  Therefore, a smaller surplus (higher ratio) affects the railway's capability to make such investments.  
Tel: (011) 2323 4801-02, 4343 4035-36 

## Budget Estimates 2014-15 (Details In Appendix Ii)

In 2014-15, the railways surplus is expected to decrease by 24% to Rs 6,064 crore thereby increasing the operating ratio to 92.5%.  
Gross traffic receipts are expected to increase to Rs 1,60,165 by 14% over 2014-15 on account of the recent hike in freight rates and passenger fares.  Total expenditure is projected to increase by 16 % to Rs 1,49,176 crore. To meet its annual expenditure, the Ministry hiked freight rates and passenger fares in June 2014. Passenger fares were increased by 14.2% which was inclusive of 4.2% Fuel Adjustment Component (FAC). Freight rates were increased by 6.5% (inclusive of 1.5% FAC).  According to the Ministry, the FAC will be linked to fuel prices to insulate the revenue from increase in fuel cost.  The hike in passenger fares was to reduce losses in passenger business that increased from 10 paise per passenger kilometer in 2000-01 to 23 paise in 2012- 13.  Loss of revenue on account of rolling back the suburban fare hike is estimated to be Rs 610 crore. The operating ratio is expected to be 92.5%.  The operating ratio has been above 90% in the last 6 years indicating lower surplus amounts. 

## Plan Outlay

The Minister proposes a plan investment of Rs 65,445 crore in 2014-15.  Compared with 2013-14, this would be a 3% increase with the extra funds coming largely via Gross Budgetary Support (an increase of 16%).  The main focus of the investment would be safety related works.  Since the internal resource component has been increased, the Extra Budgetary Support or market borrowings have been scaled down by 16%.   

## Table 1: Plan Expenditure (In Rs Crore)

% change 
  
  
2013-14 (BE) 
2014- 15(BE) 
26,000 
30,100 
16% 
Gross Budgetary 
Support Internal Resources 
14,260 
15,350 
8% 
21,103 
17,795 
-16% 
Extra Budgetary Support Railway Safety Fund 
2,000 
2,200 
10% 
Total 
  
63,363 
65,445 
3% 

Sources: Highlights of the Railways Budget 2014-15 

## Key Proposals

The Minister put forward several proposals for the coming year.  

## Resource Mobilization

To fund major infrastructure projects, the Ministry will explore alternate means of resource mobilisation so as to not be overly dependent on revenues from passenger and freight.  This would be achieved by the following: 

 Leveraging railway Public Sector Undertaking (PSU) 
resources by bringing in surplus funds from these 
organizations to fund Railways' infrastructure 
projects. 
 Domestic and foreign direct investment for which the 
Ministry will seek Cabinet approval.  While roads and highways receive investments from Foreign Direct Investment (FDI), Railways has primarily been funded by public resources. 
 Public Private Partnerships (PPP) through which the 
Ministry plans to finance the bulk of its future 
projects. 
 Strategic management initiatives include a Near Plan 
Holiday approach within which no new projects will be taken up for the next few years and the focus will be on prioritising and completing ongoing projects. 
 The Ministry proposes to increase transparency in 
procurements and create a decision support system for project implementation. 

## Organisational Reform

 At a structural level, the Railway Board's 
overlapping functions of policy formulation and implementation are being separated. 
 In order to overcome delays in project execution, a 
Project Management Group will be set up at the level of Railway Board.  Similarly, to expedite projects at the ground level, a Project Monitoring and Coordination Group consisting of officials of State Government, Railways and professionals will be set up. 

## Passenger Amenities And Services

 The Ministry proposes to provide passenger 
amenities such as escalators, lifts, foot-over bridges through PPP mode. 
 Services of Battery-operated Carts to facilitate access 
for differently-abled and senior citizens will be extended at all major stations. 
 Online booking facility of Railway Retiring Room 
will be extended to all the stations during the course of the year. 
 Budget allocation for cleanliness in the current 
budget will be increased by 40%.  Cleaning activities will be outsourced at major stations and a separate Housekeeping Wing will be set up. 
 A Corpus Fund will be set up for the upkeep of 
stations.  
 The use of bio-toilets will be increased. Bio-toilets 
have been introduced by Railways in about 2,500 coaches as of February 2014. 

## Speed

 The Railways propose to create the Diamond 
Quadrilateral Network of High Speed Rail, connecting major Metros and growth centres of the country.   A provision of Rs 100 crore has been made in this Budget for High Speed Rail Project (HSR) as an initial grant towards Rail Vikas Nigam Ltd (RVNL).  In July 2012, the High Speed Rail Corporation, under RVNL, was set up to evaluate ways to implement high-speed train projects in India. Six corridors for HSR have been identified up till now. 

 Bullet trains will be introduced by starting off with 
an already identified Mumbai-Ahmedabad sector. 
 Effort will be made to increase the speed of existing 
trains to 160-200 kmph in select sectors to reduce travel time between major cities.    

## Safety And Security

 The budget allocates Rs 1,785 crore for Road-underbridges and Road-over-bridges towards safety improvements.  
 Proposed safety measures include elimination of all 
unmanned crossings after inspection of each site.  
 Use of Vehicle Borne Ultrasonic Flaw Detection 
System is proposed to detect rail and weld fractures. In addition Ultrasonic Broken Rail Detection System will also be tried as a pilot project. 
 4000 women constables will be recruited who will 
escort the ladies coaches. 

## Rail Tourism

 Eco-Tourism and Education Tourism will be taken 
up in North Eastern States. 
 New trains will be introduced in the identified 
Special Pilgrim Circuits. 

## It Initiatives

 Railways proposes to achieve a paperless office in 
five years.  
 IT proposals also include introduction of Wi-fi 
Services in all A1 and A category stations and in select trains, real-time tracking of trains and rolling stock, station navigation information system, digital reservation charts at Stations. 
 The Ministry proposes the extension of Computerised 
Parcel Management System and extension of logistics support to various e-commerce Companies by providing designated pick-up centres at identified Stations. 
 Land assets of Indian Railways will be digitized 
using GIS mapping. 

## Improving Resources

 8 to 10 capacity augmentation projects on congested 
routes will be identified to attract investment through PPP.  Zonal Railways will be empowered to finalise and execute such projects. 
 As a priority, Indian Railways will improve port 
connectivity through PPP mode of funding in tandem with Sagar Mala Project of Port Development.   
 Railways will speed up construction of critical coal 
connectivity lines to facilitate faster transportation of coal. 

 Logistics Parks will be set up to modernize logistics 
operations.  
 More than 33% of freight trains over the system run 
empty since return traffic at existing freight rates is not forthcoming.  A pilot project will be launched where automatic rebates will be available through computerised FIOS system to customer who book for return traffic.  This would help reduce the empty flows on freight lines and generate additional revenue. 
 The Ministry plans to segregate parcel traffic from 
passenger traffic to separate terminals to improve traffic flows.  Also, parcel trains running on fixed time table will be introduced. 
 A new design of parcel vans with better tare (weight 
of empty container/ vehicle) to pay load is being finalized.  
 To develop network of freight terminals, policy of 
Private Freight Terminals on PPP model is being developed. 

## Transparency In Railway Functioning

 The Ministry will give high priority to transparency 
in administration, execution of projects and procurement.  
 E-procurement will be made compulsory for 
procurements worth Rs 25 lakh and above.  The status of ongoing projects will be made available online. 

## Urban Transport

 Mumbai city will get 864 additional state-of-the-art 
EMUs over a period of two years. 
 A study to explore the possibility of enhancing the 
existing IR network of Bengaluru will be taken up to improve the flow of commuters into the city from surrounding rural areas.  

## Freight Business

 Online Wagon Demand registration will be launched 
in the next two months to facilitate online payment of Wagon Registration fee as well as registering demand for wagons.  
 A US $1100 million loan agreement for Kanpur-
Mughalsarai section of Eastern corridor of Dedicated Freight Corridor will be signed with the World Bank in the current year.  

## New Services

 The Ministry proposes to introduce 5 Jansadharan 
Trains, 5 Premium Trains, 6 AC Express Trains, 27 Express Trains, 8 Passenger Trains, 2 MEMU services and 5 DEMU services and extend the run of 11 existing trains. 
 Railways also proposes to construct 18 new lines. 

## Others

 In 2014-15, an outlay of Rs 5,116 crore is earmarked 
for projects of North-East which is 54% higher from last year.  
 Many stoppages have been provided on experimental 
basis on the request of public representatives.  These stoppages will be continued till September 30, 2014 and allowed after that solely on the basis of operational feasibility and commercial justification. 
 An Innovations Incubation Center will be set up to 
harness ideas from the Railways staff and convert them to practical solutions. 
 The contribution towards Staff Benefit Fund will be 
increased from Rs 500 per capita to Rs 800 per capita. 
 Railways proposes to improve system capabilities for 
e-ticketing to support 7200 tickets per minute as against 2000 tickets per minute and allow 1,20,000 simultaneous users at any point in time. 
 Branded ready-to-eat meals will be introduced onboard. Catering services will be improved by Quality Assurance Mechanism through Third Party Audit by National Accreditation Board for Certification 
Bodies certified agencies to improve catering 
services. 
 The Ministry is considering a Railway University for 
both technical and non-technical subjects.  They will also tie up with technical institutions for introducing railway oriented subject for graduation and skill development. 
 
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## Appendix I: Comparison With Ntdpc India Transport Report 2032

The National Transport Development Policy Committee (NTDPC) chaired by Mr. Rakesh Mohan, recently published the India Transport Report 2032. The report tries to project transport and policy requirements for the transport sector for the next 20 years and makes recommendations accordingly. Shown below is a brief comparison of how the present Railways budget compares with the recommendations in the report.  

| NTDPC Recommendation                                                         | Railways Budget 2014-15 Proposals                                        |
|------------------------------------------------------------------------------|--------------------------------------------------------------------------|
| Logistics Parks will be set up to modernize logistics operations.            |                                                                          |
|                                                                              |                                                                          |
| Work closely with state and local authorities to set up rail based logistics |                                                                          |
| parks to attract increasing volumes of cargo to rail.  Develop 15-20         |                                                                          |
| logistics parks at main network hubs.                                        |                                                                          |
| Upgrade speed to 160-200 kmph on select corridors.                           | Effort will be made to increase the speed of existing trains to 160-200  |
| kmph in select sectors.                                                      |                                                                          |
| Increase supply (more trains/ longer trains) to meet demand.                 | Introduction of 58 new trains, 18 new lines and extension of 11 existing |
| trains.                                                                      |                                                                          |
| Construction of 6 DFCs as top priority. Highest priority to the Eastern      |                                                                          |
| DFC.                                                                         |                                                                          |

A US $1100 million loan agreement for Kanpur-Mughalsarai section of Eastern corridor of Dedicated Freight Corridor will be signed with the World Bank in the current year.  
Expand partnership with the private sector. 

Most new projects except train operations are being planned to be implemented as PPPs.  
Consider High speed corridors (speed potential 350 kmph) on a pilot basis, only when deemed economically viable. 

A provision of Rs 100 crore has been made in this Budget for High Speed Rail Project as an initial grant towards RVNL. 

Encourage private players in setting up manufacturing units for tolling stock and components. 

Private organizations have been encouraged to engage with the government on various projects such as station maintenance, passenger amenities etc. 

Fare revision to reduce/ eliminate losses on passenger services. Govt may subsidize up to 25% of the cost of suburban rail and no subsidies for non-suburban rail services.  
In June 2014, passenger fares were increased by 14.2% and freight rates were increased by 6.5%, both inclusive of FAC.  The hike in suburban fares was rolled back.  
Establish Railway Research and Development Council and Railway Research and Development Institute. Establish Academic Centres of Excellence or Railway Research Centres in technical institutes and at least 2 IIMs. 

An Innovations Incubation Center will be set up to harness ideas from the railways Staff and convert them to practical solutions.  The Ministry is considering a Railway University for both technical and non-technical subjects.  They will also tie up with technical institutions for introducing railway oriented subject for graduation and skill development. 

Improve North East Rail Connectivity through new rail lines. 

In 2014-15, an outlay of Rs 5,116 crore is earmarked for projects of North-East which 54% higher from last year.  
Sources: NTDPC India Transport Report 2032; Railways Budget; PRS 
 

% Change 
Actual 
BE 
RE 
RE/BE 
BE 
% Change 
(2014-15 
BE/ 2013-
 
(2012-13) 
(2013-14) 
(2013-14) 
(2013-14) 
(2014-15) 
14 RE) 
Receipts 
  
  
  
  
  
  
Passenger - Upper Class 
9,350 
10,106 
11,176 
11% 
       13,330  
19% 
Passenger - Second Class 
21,973 
32,104 
26,324 
-18% 
31,315 
19% 
Other Coaching 
3,054 
3,422 
3,665 
7% 
4,200 
15% 
Freight 
85,263 
93,554 
94,000 
0% 
1,05,770 
13% 
Sundry 
4,261 
4,506 
5,285 
17% 
5,500 
4% 
Suspense 
-168.42 
50 
50 
0% 
50 
0% 
Gross Traffic Receipts 
1,23,733  
1,43,742  
1,40,500  
-2% 
1,60,165  
14% 
Miscellaneous 
2,448 
2,884 
3,668 
27% 
4,209 
15% 
Total Revenue 
1,26,180 
1,46,626  
1,44,168  
-2% 
1,64,374 
14% 
Expenditure 
  
  
  
  
  
  
Ordinary Working Expenses 
84,012 
96,500 
97,060 
1% 
1,12,649 
16% 
Appropriation to Depreciation Reserve Fund 
6,850 
7,500 
6,500 
-13% 
6,850 
5% 
Appropriation to Pension Fund 
20,710 
22,000 
23,700 
8% 
28,550 
20% 
Total Working Expenditure 
1,11,572 
1,26,000 
1,27,260 
1% 
1,48,049 
16% 
Miscellaneous 
993.2 
1,230 
1,125 
-9% 
1,127 
0% 
Total Expenditure 
1,12,565 
1,27,230  
1,28,385  
1% 
1,49,176 
16% 
Dividend payable to General Revenues 
5,349 
6,249 
7,840 
25% 
9,135 
17% 
Net Surplus after payment of Dividend 
8,266 
13,147 
7,943 
-40% 
6,064 
-24% 
Operating Ratio 
90.2% 
87.8% 
90.8% 
3% 
92.5% 
1.7% 

       
Appropriation to Railways Development Fund 
7,815  
3,550 
2,675 
-25% 
300 
-89% 
Appropriation to Capital Fund 
451 
5,434 
0 
-100% 
5,663 
 
Appropriation to Debt Service Fund 
4,163 
5,268 
27% 
101 
-98% 

 
Source: Budget of Railways Revenue and Expenditure of the Central Government for 2014-15  

## Explanatory Notes Other Sources Of Earning

1. 
Coaching earnings include income from parcels and luggage 
2. 
Sundry earnings represent earnings from lease of railway land, advertisement and publicity etc. 
3. 
Suspense represents unrealized traffic earnings 

## Performance Parameters

4. 
'Net Surplus after payment of Dividend' represents excess of receipts over expenditure after the Dividend liability (payment for investment in Railway capital) of General Revenues has been paid off 
5. 
'Operating Ratio' is the ratio of operating expenses to receipts. A lower ratio indicates higher surplus availability for investments. 

## Railway Funds

6. 
Depreciation Reserve Fund - Finances the cost of new assets replacing old assets including the cost of any improved features. Appropriation to this fund are made on the recommendations of the Railway Convention Committee (RCC) 
7. 
Pension Fund - Finances all pension payments to retired Railway staff 
8. 
Development Fund - Finances expenditure on Passenger and Other Railway Users' Amenities Works, Staff Welfare Works, Unremunerative operating improvements etc. 
9. 
Capital Fund - Used for capital augmentation. Appropriations to this fund are made only after making necessary appropriations to other funds. 
 

## Appendix Iii: Infrastructure/ Stock Augmentation

| 2012-13                                   | 2013-14    | 2014-15    |
|-------------------------------------------|------------|------------|
|                                           |            |            |
| Achievement                               | Target     | Target     |
|                                           |            |            |
| 1. Electrification (Route Kms.)           | 1,317      | 1,350      |
| 2. Track Renewals (Track Kms.)            | 3,296      | 2,100      |
| 3. Construction of New Lines (Route Kms.) | 501        | 450        |
| 4. Gauge Conversion (Route Kms.)          | 605        | 404        |
| 5. Rolling Stock                          |            |            |
|                                           |            |            |
| (a) Locos                                 |            |            |
|                                           |            |            |
| (i) Diesel                                | 348        | 375        |
| (ii) Electric                             | 330        | 300        |
| (b) Coaches including                     |            |            |
|                                           |            |            |
| (i) EMU/MEMU/DMUs/Metro/etc.              | 4,023      | 4,085      |
| (c) Wagons (in terms of vehicle units)    | 16,894     | 15,666     |

Source: Explanatory Memorandum to Railways Budget 2014-15 
2014