Prabhu, whose appointment as railway minister last November had raised hopes of fresh thinking in a ministry long used by politicians to dispense favours to their constituencies, also announced hefty spending increases for building more capacity and track electrification, and unveiled plans to introduce faster trains on existing tracks and sweat railways' assets better by roping in the private sector.
The cash-strapped railways will create new special purpose vehicles to secure investments, he said, as he sketched out plans to tap lowcost money from long-term investors such as insurance and pension funds, and multilateral agencies. Prabhu, who has secured support worth Rs 40,000 crore from the Union Budget which signals the government's intent to spend more to revive investments, plans to tap a wide range of non-railway sources to augment investments, including setting up JVs with states, PSUs with large investible resources and multilateral and bilateral agencies.
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Other measures include monetising rail assets, particularly railway stations that can be expanded and refashioned as business hubs, and leveraging earnings to raise capital from the market. The budget drew plaudits from experts, many of whom saw it as a credible start to try and reform a sinking organisation, but it received a thumbs down from the markets where the feeling was it wasn't bold enough because it steered clear of privatisation and did not have bold moves for organisational change vital to realise some of Prabhu's plans.
Share prices of companies that cater to the railway sector fell by up to 7%, outpacing a decline in the broader market. Political rivals of BJP slammed the budget, while its partner Shiv Sena wasn't enthused either, saying the budget had little for Mumbai or Maharashtra. "After two decades of following a suicidal path of playing to the galleries and constituencies of incumbent railway ministers, after self-inflicted injuries of decades of neglect of customers and railways assets, this budget comes as fresh morning air," said Akhileshwar Sahay, mentor at infrastructure consulting firm Feedback Infra and a former Indian Railways official.
"The key challenge before Prabhu is now to walk the talk and ensure that his bold moves do not die in an embryonic stage. Such is the cultural stasis and past track record of the railways."
FREIGHT HIKE TO HURT COMPANIES
The minister, as predicted by ET on Wednesday, did not raise passenger fares, to the disappointment of some reform pundits. Freight charges were, however, increased by up to 10%, portending higher costs for companies in sectors such as steel, coal and fertilisers. Prabhu said prices had already been increased last June and there had been no major concomitant improvement in passenger amenities.
"I don't have the moral authority to increase fares without improving the facilities," he told ET in an interview, adding that it would be difficult to explain fare increases when diesel prices had fallen. In the next five years, the railway minister has promised major improvements in customer experience in a host of areas such as cleanliness, comfort, service quality and train speeds. From a 24-hour helpline to mobile charging facilities on all trains to a choice of cuisine to WiFi in stations, Prabhu said railway consumers would get access to all these services.
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