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This is the second year that the rail budget has been merged with the Annual Budget of the government of India. This is why the railway sector has lost its prominence as a matter of discussion. Harindra Rao, General Manager, the Eastern Railways, said that matters like introduction of new trains and a lot of projects for the railways, will be decided by the Ministry of Railways separately and these not have been announced in the Budget.

Capital expenditure

The most important thing is that the Finance Minister (FM) Arun Jaitley has allocated ` 1.48 crore as the capital expenditure target for 2018-19. This is known to be the highest ever capital expenditure allocation. In the last Budget, it had been ` 1.31 lakh crore. The FM has said that a large part of this will be spent on capacity creation and different initiatives for railways. These include doubling of track, third and fourth line works of 18,000 km; and 5,000 km of gauge conversion will also come under capital expenditure heads. As many as 600 railway stations will be redeveloped, which will be provided with Wi-Fi and CCTV cameras. There will also be introduction of modern train-sets, escalatos for stations with footfalls over 25,000 and many other aspects of passengers’ amenities. The Railway Minister, Piyush Goyal is reported to have said that once the 18,000 km expansion and 5,000 km doubling is done, the railways would once again emerge as a preferred mode. Jaitley said Mumbai’s suburban rail system is being expanded at a cost of `10,000 crore, and an additional suburban network worth ` 40,000 crore was also being planned. Similarly, 160 km of rail network worth ` 17,000 crore has been planned for Bengaluru.

Rail Minister after the Budget announcement

The Railways Minister talked to pressmen after the Budget. He reportedly said, “We are going to improve efficiency. Losses can be made up through efficiency.” He also reportedly said that the railway board had already taken a decision to modernise the entire signalling system. “European Train Control System (ETCS) II, which is the most
modern signalling system in the world will be brought to India. In the next five to six years as the system is put in place, there will be no delays due to fog anymore,” he said at the conference. The Minister also said that India’s most ambitious indigenous train-sets, which are being built in Chennai, are on track and the first such train, which will run at a speed of 176 km/hour, will become operational in September 2018. Goyal Also reportedly said that German-make Linke-Hofmann-Busch passenger coaches named “Train 18” and “Train 20” in consonance with the year of their production, which are completely indigenous coaches, are designed to run at a top speed of 160 kmph. These two trains, once operational are aimed at replacing the Rajdhani and Shatabdi trains.

Profitability ratios

In a commercial organisation such as the Railways there are three types of profitability ratios. These are: 1) operating ratio, 2) return on capital, and 3) ratio of excess to capital-at-charge and investment. Among these operating ratios (OR) are the most common indicator. The OR is defined as follows: OR = net sale value of traffic/ total working expenses x 100. But in ordinary language, the OR means how much money is to be spent to earn ` 100. The present Budget expects that the present FY railway will enjoy 95%. But the next FY it has been projected as 93%. That means in the next FY railways will be more profitable or efficient as then ` 93 will be spent to earn ` 100 compared to ` 95 to earn ` 100 in the current FY.

The revenue from passenger fare was increased to ` 37,134 crore between April-December 2017. Last year, `35,295 crore was earned during the corresponding period in 2016. It is reported that revenue from freight went up to ` 80,691 crore between April-December 2017. In the same period in 2016, the Railways had earned ` 76,288 crore.