Indian Railway Budget 2011-2012 Analysis

Posted in Finance Articles, Total Reads: 5892 , Published on 02 March 2011

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In India apart from the general budget, like the Union Budget 2011, there is yet another budget read out in the floor of the parliament. It is that of the Indian Railways. The concept of presenting the rail budget started in the year 1924 only because back then it formed one third of the general budget. It did require a dedicated budget then but we have still continued with the tradition of presenting the rail budget every year since then. However over the years though the reason why it was established has diminished, but there still continues to be a separate budget for it. The reason varies from railways being one of the largest state run enterprises touching the lives of millions of people of the country to it being a politically lucrative portfolio in the government.

Rail Budget 2011-2012

The Railway Budget of 2011 presented by Mamata Baneerjee can be termed as a populist budget which has something for everyone. Coming against the backdrop of the assembly elections in 5 states, the budget has been prepared to keep the common man as well as the industry happy and at the same time keeping the political gains to be derived out of it in mind. The rail budget consisted of a number of sops including the proposal to expand rail network, modernise the railways and improve the safety and security features and also improve the benefits of the railway employees.

This article would highlight the features of the rail budget under 4 heads

1.Financial: Indian railways announced the highest ever investment in a single year when the budget earmarked Rs 57630 Cr for the financial year 2011-12. It has targeted a gross traffic receipt of Rs 106239 Cr as against Rs 94840 Cr for the year 2010-11. The common man and the industry have been kept happy by maintaining a status quo on passenger and freight rates. The railways plans to raise Rs 20594 Cr through tax free IRFC bonds and expects Rs 20000 Cr as the budgetary support. It plans to generate Rs 14219 Cr from internal resource and Rs 1041 Cr from diesel cess and Rs 1776 Cr from external sources of financing such as PPP. In the financial year 2010-11, railways have been functioning at an operating ratio of 92.1% and have set a target of bringing it down to 91.1% for the next year.

2.Infrastructure: The rail budget has announced a slew of infrastructural activities which is going to be undertaken. One of the major announcements was in the area of PPP where the railway minister announced setting up single window clearance for PPP clearance. It also announced setting up thermal power plants in Bihar, Andhra Pradesh, Uttar Pradesh and Maharashtra. She also proposed to set up rail industrial park in Nandigram and new coach factory in Kolar and Palaghat. Also the budget proposed to setup metro coach factory in Singur and diesel locomotive centre in Manipur. It also proposed to complete 1000km or new rail lines in FY12 and give 12000 acres for dedicated freight corridor.

3.New Launches: The budget announced the launch of 9 new Duronto trains, 3 Shatabdi trains and 56 new express trains. Apart from these10 Rajya Rani trains to ply intra-state from capitals were also announced and 15 new suburban trains in Kolkata. 2 new Double decker trains, 22 DEMU trains, 8 MEMU trains and 47 more suburban services in Mumbai.

4.Facilities and Passenger Amenities: The budget announced plans to improve the passenger experience on railways. It proposes upgradation of 442 railways station, construction of 172 rail overbridges, anti-collision devices in 8 rail zones. Apart from these the budget proposes to cut AC e-ticket from 20 to 10 and Non AC e-ticket fee from 10to 5. The age limit of senior women citizens cut to 58 years and concession for senior male citizens up to 40% from 30%.It also proposes multipurpose ‘Go India’ smart cards which are basically a single window package for buying tickets for suburban, metro and long distance trains.

So it has been indeed a please all budget but whether railways will be in a position to sustain it keeping in mind no change in passenger and freight rates needs to be carefully scrutinized over the next one year. The railway has always been used by the politicians to fulfil their social obligations and if the trend continues in the future it is quite possible that it will follow the same path as that of Air India.


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