Economic Survey Railway Budget i

[Economic Survey] Ch11: Railway Budget, Infrastructure, Tariff Authority, Biodiesel, Biotoilets, FDI & more

1. Prologue2. [Act 1] Railways: GK & Static Theory

1. Railway budget vs General Budget2. Railway Gauges (British Legacy)3. Railways: Train types

3. [Act 2] Railways: Current / Contemporary topics1. C1: Pir Panjal Tunnel, Qazigund Banihal2. C2: What is Cross subsidization in Railways?3. C3: What is Operating Ratio of Railways?4. C4: Fuel Linked Tariff policy5. C5: Rail Tariff Authority

4. [Act 3] Railways: Clean energy- sanitation measures1. CE1: 5% Biodiesel in Railways

1. What is Biodiesel?2. What’re the Benefits of Biodiesel?3. Jatropha plant: Basics

2. CE2: Bio-toilets3. CE3: Green curtain (interim budget)4. CE4: Clean energy Company

5. [Act 4] Rail Budget 20141. Passenger amnesties, Railway Food2. Ticket booking, Rail Hygiene3. Passenger safety, Ultra Sonic Rail breakage4. RAIL TOURISM, Udhampur Katra5. Metros, Diamond quadrilateral6. Bullet train, Rail training7. Agriculture, Parcel biz8. E-governance /ICT initiatives

6. [Act 5] Economic Survey Fodder1. F1: Challenges of Indian Railways2. F2: FDI in Indian Railways3. F3: PPP/Infra/FDI (Rail budget 2014)4. F4: Rail reforms in 2013

7. Appendix: Stupid statistics

Prologue

Economic Survey Ch11. Energy, Infrastructure and Communications. Total three subparts

1. Energy2. Infrastructure: highways, shipping, aviation3. Railways infrastructure (you’re here, first two parts coming soon).

[Act 1] Railways: GK & Static Theory

Page 1 of 11Mrunal Economic Survey Ch11: Railway Budget, Infrastructure, FDI

10-Aug-14http://mrunal.org/2014/08/economic-survey-ch11-railway-budget-infrastructure-tariff-aut...

Railways Timeline

1853 �Mumbai to Thane (34kms)�under Governor General Dalhousie

1854 Calcutta to Raniganj1856 Madras to Arkonam1�24-25 Rail budget separated from general budget (Acworth)

2010 Kolkata metro declared the 17th Rail zone2013 fuel linked tariff policy

2014�Mumbai: new Monorail, new metro-rail.��aharalagun: new railway line to connect Itanagar (Arunanchal Pradesh) with

rest of India

Railway budget vs General Budget

�1�24-25: The British started separate rail budget on Acworth Committee recommendations�Indian constitution does not provide for separate railway budget or budget in parts.�But Parliament rules of procedure of Parliament permit it.�Although rail budget’s receipt and expenditure are also shown in General budget. Observe

following:

General Budget: Revenue partreceipt (incoming)

Expenditure (outgoing)tax non taxdividend from railways counted here. Grants given to railways counted here

General Budget Capital part:receipt (incoming money) Expenditure (outgoing)

�Money received from disinvestment counted here�e.g. if Rail ministry sold its shares from one of its PSUs. loans given to railways

Parliamentary convention committee reviews the railways’ contribution to general budget.

Railway Gauges (British Legacy)



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Broad �1,676 mm (5 ft3�)�British used it to send raw material from Indian hinterland to port cities

Meter 1,000 mm (�3ft3�)�arrow 762 mm� 610mm (lift gauge)

��an�in� trac� len�t� in �ndia: broad � meter � narrow�Pro�ect �ni��a��e� to convert selected routes into broad gauge.

Railways: Train typesList not exhaustive

DEMU Trains �same as above but with diesel engine�Diesel multiple unit

Duranto�Duranto means,� restless� in Bengali�Long distance non stop from source to destination�as fast as Rajdhani and Shatabdi

Express Trains speed �160 kmph

Garib-rath AC trains for poor people- at cheaper cost. But seat space narrow, no food/bedding given.

Jansadharan

�They’ve no reservation seats.�They’ve only general coaches. �o AC coaches.�They’re run to handle rush season e.g. summer vacation.�Modi Railbudget promised to run more such trains on popular

routes.

MEMU Trains

�Mainline Electric Multiple Unit�suburban trains.�has multiple motors for each car I.e., the same car that carries

passengers also has electrical engine

Premium Trains/Jai Hind express

�Trains for the high end passengers�Dynamic fare system based on demand. Principle similar to air

tickets�Regular fare will not be applicable

Rajdhani Connects Delhi with state capitals. Started in �6�Red ribbon to spread AIDS awareness

Shatabdi �Connects Metro cities with other cities.�called �Shatabdi� because started in �88 �ehru’s centenary.



[Act 2] Railways: Current / Contemporary topics

C1: Pir Panjal Tunnel, Qazigund Banihal

�a�i��nd �ani�al �ection Pir Pan�alIRCO� ltd built it Hindustan Construction company

�18km long rail section�11.2 kms tunnel.�Longest rail tunnel in India, 2nd longest in Asia. 1st

longest is in China.

Joins Qazigund (Kashmir) with Banihal (Jammu)

Pir Panjal: is name of the tunnel on that section. (Technical name T-80 tunnel)

next project: connecting Udhampur Banihal (2017)

�built with �ew Austrian tunneling method. First time in India

�Passes �450m below the existing Jawahar Road tunnel.

Before moving to Rail Tarrif authority, we need to learn two definitions:

C2: What is Cross subsidization in Railways?



�To keep rail travel cheap for the poor people, Railways keeps the passenger tickets lower than its input cost. � obviously loss making. (23 paise per passenger per kilometer in 2013. In 2001, it was 10 paise.)

�To compensate this loss, Railway keeps freight (goods transport) prices higher. This is called �Cross subsidization�.

C3: What is Operating Ratio of Railways?

1. Railway’s Operating Ratio is �4%.2. Meaning they spend �4 paise out of every rupee earned. Only 6 paisa left in surplus. (This is

Rail minister’s explanation in his budget speech 2014)

C4: Fuel Linked Tariff policy

�Fuel (diesel and electricity)� �17% of the Railways’ total operation cost.�So, if railways wants to improve its �operating ratio�, it must keep changing fares depending

on fuel cost.�Therefore, (UPA-II) Rail budget 2013 announced �Fuel adjustment component� (FAC)

WeightageHigh Speed Diesel (HSD) 7.3%Electricity 15.5%.

�FAC is Dynamic in nature- fares can be reduced if fuel becomes cheaper.�To be Revised every 6 months.�Last time fares revised in October 2013.�So next revision should have been done in April/May 2014. But Congress Government didn’t

do it (for vote bank / model code of conduct).�June 2014: (Modi) Government raised passenger ticket price by �14%, and freight charges

by 6.5%. Because of the same Fuel-linked pricing policy.�This will improve railways’ income by 8000 crore Rs. But even this much money insufficient

to finish past projects. (we need 50,000 crores every year for next ten years.)

C5: Rail Tariff Authority

�Railway makes 23 paisa loss per passenger, per kilometre. Therefore, need to raise prices.�2014: interim budget announced setting up the Rail Tariff Authority (RTA).�Chairman � 4 members.�To advise the government on prices for both passenger trains and good trains.�Depending on input cost and volatile market conditions.�Will improve fare : freight ratio�Will reduce the cross subsidization between freight and passenger train operations.�But, under the Railway Act, only the Railway Board can decide on the prices of rail services.�So, RTA has been established through an executive order. Just like UIDAI.�However, Modi’s rail budget is silent on this issue.

[Act 3] Railways: Clean energy- sanitation measures

four topics: Biodiesel, Biotoilets, Green curtain, Clean energy company.

CE1: 5% Biodiesel in Railways



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CE4: Clean energy Company

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[Act 5] Economic Survey Fodder

F1: Challenges of Indian Railways

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F2: FDI in Indian Railways

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Appendi�: Stupid statistics

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Economic Survey Railway Budget i