Railway Budget 2015: Railways goes populist again, fare hike not on cards

Rail passengers can heave a sigh of relief. Railway Minister Suresh Prabhu is unlikely to hike the railway fares in the Railway budget 2015-- the first for him. Contradictory to the expectations of a steep hike, the railway minister has decided to give it a miss this year.

According to media reports, despite a staggering balance sheet, the minister decided against the mood as the passenger growth has been on a decline while railway freight too did not show any promising growth.

“Fares were increased by the government in June last year, three weeks before the then railway minister Sadananda Gowda presented his budget. It was a steep hike — 14.2% in passenger fares and 6.5% in freight. With diesel prices down, the government does not have a basis to go for a hike," the news report quoted a railway official on the condition of anonymity.

Interestingly, railway minister Prabhu was personally in favour of a fair hike but was convinced against the idea by senior officials of the organisation.

He is now banking on the main Union Budget for higher allocation of funds as well as reforms in policies to boost investments in this sector. The ministry has sought an increment of Rs 50,000 crore in the budget, up from the present level of Rs 38,000 crore.

“Prabhu will also take the joint venture and public-private partnership (PPP) route to raise another Rs 70,000 crore and is likely to go in for bilateral financing and technological support from countries such as China, Japan and France, all of which are major suppliers and have evinced interest in participating in India's railway expansion,” suggested the report.

Interestingly, analysts are keenly awaiting the rail budget. It is being anticipated that the ministry will open up to the private sector, which in turn, could turn tables for the organisation.

“What the markets expect are more details on how would the government go about funding the capital expenditure plans. What are the innovative means that the government will use and how will they tap the sovereign wealth funds, pension funds, life insurance companies overseas at competitive rates. There is no dearth of resources overseas that are willing to invest for the long - term,” said Ajay Bodke, head of investment strategy and advisory, Prabhudas Lilladher in another media report.

The railway budget is scheduled to be announced on February 26, 2015 and is being looked at as a pointer to the Narendra Modi government’s first full-fledged Union Budget, which will be unveiled on Saturday, February 28, 2015 by Finance Minister Arun Jaitley.