Pre Budget Transportation Analysis

8/14/2019 Pre Budget Transportation Analysis

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`Annual budgetary allocation on transport

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Expected Union Budget: 2010-2011

Transport Sector

Submitted by:

Tanya Ahluwalia(2009A01)

Yateesh Hoblidar(2009A02)

Aakshita Chandiramani(2009A05)

Tushar Alva(2009A06)

Neha Agarwal(2009A07)

Shaleen Agrawal(2009A12)

Shreeya Bhat(2009A13)

Vikram Veer(2009A16)

Aviral Sharma(2009A35)

Aditi Sood(2009A59)

Macro Economics Assignment


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ContentsINDUSTRY OVERVIEW..................................................................................................... 4

LAST YEAR BUDGET ANNOUNCEMENTS .................................................................... 5

1. Infrastructure Development ........................................................................................... 6

2. Aviation ........................................................................................................................ 6

3. Railways ....................................................................................................................... 6

4. Roads ............................................................................................................................ 7

5. Ports & Shipping ........................................................................................................... 8

IMPACT ........................................................................................................................... 9

FDI in transport sector in India: ........................................................................................... 10

Annual budgetary allocation on transport: ........................................................................... 12

Projection during Eleventh Plan and the Allocation for 2010-2011 ...................................... 12

Roadways:....................................................................................................................... 12

Railways: ........................................................................................................................ 14

Shipping: ......................................................................................................................... 18

Aviation: ......................................................................................................................... 19


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Prepare a detail report (with chart) on annual budgetary allocation on transport. Discuss the

different policies adopted by the central government for this particular sector since 1950-51.

Make an estimate from coming budget and justify.

1) Industry overview including recent developments 2) Last year's budget announcements 3) Impact of last year's announcements 4) Expectations from the coming budget including special emphasis on expected foreigninvestments and related government policies in the sector.

INDUSTRY OVERVIEWIn India, the share of the transport sector in GDP (gross domestic product) in 1997/98 was7.3% (1993/94 prices). Road transport and the railways account for the majority of thiscontribution. Since the early 1990s, India's growing economy has witnessed a rise in demandfor transport infrastructure and services by around 10 percent a year.

Civil Aviation in India is big business and it has undergone dramatic expansion during thedecade. This fact is reiterated by the presence of numerous airlines and their expending fleetsize. There are 11 scheduled passenger operators and one cargo operator in the country with a

combined fleet size of 407 aircraft. There are also 99 non-scheduled airline operators whohave 241 aircraft in their inventory. The sector showed signs of slowdown due fluctuations inthe cost of air turbine fuel (ATF) and the global economic slowdown. To add to the woes of the aviation sector, the national carrier is in financial doldrums and looking forward to a bail-out from the Government.

The performance of the railways has improved during the recent years on account of betterresource management through increased wagon load, faster turnaround time and a morerational pricing policy. But there are further efforts to be made in this sphere. The routelength has grown from 62,367 km in 1990 to only about 63,350 km now. A comparison of these statistics with China (network currently stands at 80,750 km, with goal to add 6,000 km

of new tracks every year till 2020), shows the distance yet to be travelled by Indian Railways

Roads all over India have to be developed to facilitate better road transportation and broughtat par with international standards. The National Highway Development Programme (NHDP)is a major thrust in this direction. The implementation of NHDP though has been faced with anumber of constraints that include delays in land acquisition and removal of structures,shifting of utilities, law and order problem in some states and poor performance of somecontractors. The infrastructure development in the road sector also suffered largely when outof the 60 projects for which tenders were floated during 2008, only 10 attracted bids.

Ports, as referred always, are the gateways to any countrys economic prosperity. TheNational Maritime Development Programme (NMDP) has been formulated to provide theports & shipping sector a much needed shot in the arm. The NMDP has resulted in


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augmenting adequate capacity and modern handling facilities at ports, but operationalefficiency of these ports has a long way to go. The average turnaround time is 3.85 daysduring 2008-09, compared with 10 hours in Hong Kong, undermines the competitiveness of Indian ports.

The financing of infrastructure development has suffered due to the economic downturn. Theflow of resources to infrastructure through external commercial borrowings (ECBs) hadquadrupled from 2005-06 to 2007-08, but then came down drastically during 2008-09(refervtable). The air transport sector witnessed slowdown in ECB flows during 2008-09. Thefunds raised through public and rights issues by infrastructure sectors have shown a steepdecline. Another major issue is the inadequate availability of long-term finance (10 year plustenure) both equity and debt for PPP projects. Private sector will play a larger role throughPPPs in infrastructure, but bulk of the investments has to come from the government.

LAST YEAR BUDGET ANNOUNCEMENTSThe Finance Minister, laid emphasis on increasing budgetary allocation towards the primarygrowth drivers, infrastructure and power. Government has proposed to increase theinvestment in infrastructure to more than 9% of GDP by 2014. Budget Estimates provide fora total expenditure of Rs.10,20,838 crore consisting of Rs.6,95,689 crore under Non-plan andRs.3,25,149 crore under Plan registering an increase of 37% in non-plan expenditure and34% in plan expenditure over B.E. 2008-09. Fiscal deficit as a percentage of GDP isprojected at 6.8% compared to 2.5% in B.E. 2008-09 and 6.2% as per provisional accounts2008-09.

The budgetary allocation for infrastructure ministries such as civil aviation, telecom,shipping, road transport, railways and related areas like drinking water and urbandevelopment has been increased to Rs 61,099 crore; up from Rs 48,866 crore in the previousyear. Apart from direct spending, infrastructure will also get a boost through some of theindirect measures announced in the Budget. To this end the following measures in this regardwere announced in the Budget:


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1. Infrastructure Development

The India Infrastructure Finance Company Limited (IIFCL) was earlier set-up as a specialpurpose vehicle for providing long term financial assistance to infrastructure projects. Thebudget intends to provide greater flexibility to IIFCL to aggressively fulfil its mandate. IIFCLwill develop, in consultation with banks, a takeout financing scheme to facilitateincremental lending to the infrastructure sector. Takeout financing is an acceptedinternational practice of releasing long term funds for financing infrastructure projects. Itconsists of a few banks joining hands as a consortium and taking over the loan portfolio inturns. It can be used to effectively address the asset liability mismatch of commercial banksarising out of financing infrastructure projects and also to free up capital for financing newprojects. IIFCL will refinance 60% of commercial bank loans for Public Private Partnership(PPP) projects in critical sectors over the next fifteen to eighteen months and along withbanks support infrastructure projects involving a total investment of Rs. 1000 billion.

2. Aviation

The budgetary allocation to the Ministry of Civil Aviation for the 2009-10 is Rs. 887 crore.The growth in budgetary allocation for the ministry is down to just 3.6% in 2009-10 fromnearly 20% in the earlier year. The Government has made no allocation for any budgetarysupport for NACIL. The breakup of the numbers for 2009-10 shows that bulk of theallocation (Rs 620 crore of the Rs 887 crore) is towards subsidy for operations of Hajcharters. The budget focuses on airport infrastructure development. The budgetary allocationsto the aviation sector include:

The Government has increased the target of internal and extra budgetary resources (IEBR -money from loans or through reinvestment of profits) which will be raised by PSUs under theMinistry of Civil Aviation by over 63.5%, from Rs 7,320 crore in the revised estimates of 2008-09 to Rs 11,975 crore in 2009-10. The money will be used mostly to fund the aircraftacquisition programme of the NACIL and also AAI for expansion of airports in Kolkata andChennai, among others. In the Budget documents, the IEBR target sanctioned for NACIL hasbeen doubled from Rs 4,136.9 crore in 2008-09 to Rs 8,165.6 crore in 2009-10. The IEBR forAirports Authority of India has been increased substantially from Rs 2,567.2 crore in 2008-09to Rs 3,145.8 crore in 2009-10.

3. Railways

The Railway Budget for 2009-10 has been on expected lines. There is no increase in faresand freight. The passenger segment has been given importance with a slew of measures to

please the common man. These range from monetary concessions to better travel facilitieswith respect to ticketing, food and environment. The second most important infrastructure


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ministry in terms of Budget allocation was the rail ministry. The budget allocation forRailways increased from Rs.10,800 crore in Interim B.E. 2009-10 to Rs.15,800 crore in B.E.2009-10.

The rail budget highlights the following points:-

Plans to acquire 18,000 wagons under the rolling stock programme as against 11,000wagons in 2008-09. The ministry also plans to add 4590 coaches and 500locomotives.

Rs. 1,102 crore allocated towards improving passenger amenities New policy to allow construction of private freight terminals and logistics parks Tatkal scheme to be made passenger friendly. Railw ay tickets to be made available through post offices and mushkil aasaan

mobile vans. Concession for press persons increased to 50%. Monthly ticket of rs. 25/- for unorganized sector/poor under izzat scheme only

ladies Plans for 3500 kilometers of track renewal; 1000 route kilometres of electrification;1300 route kilometres of gauge conversion.

Plans for 250 kms of new lines to be added; 700 kms doubling of lines targeted. World class stations to be developed on publicprivate partnership model Proposed setting up of a new factory at Kanchrapara- Halisahar Railway complex in

West Bengal with annual production capacity of 500 coaches. This unit will be set upin Joint Venture /Public Private Partnership mode.

Yuva trains from rural hinterland to metros at concessional fare 12 new point-to- point duranto trains 57 new trains, extension of 27 trains and increase in frequency of 13 trains and air-

conditioned double-decker trains proposed.

4. Roads

The budgetary allocation for the Ministry of Road Transport and Highways has beenincreased from Rs. 18,217 crore in 2008-09 (revised) to Rs. 21,635 crore in 2009-10. Theoverall allocation for National Highway Authority of India (NHAI) has been increased fromRs 11,051 crore in the previous year to Rs 13,646 crore in the current year. The IEBR targetfor NHAI has been increased by 35% in 2009-10 as compared to the previous year.

The allocation during the current year to National Highways Authority of India (NHAI) forthe National Highways Development Programme (NHDP) has being stepped up by 23% overthe 2008-09 (BE). This will provide the necessary impetus to the road sector. The highestbudget allocation in the infrastructure sector was for ministry of road transport which gotabout a third of the Budget allocated for the main infrastructure ministries. The budgethighlights the following provisions for the road sector:-

NHAI can use increased allocation to provide VGF to the private developers Allocations under Pradhan Mantri Gram Sadak Yojana (PMGSY) increased by 59%

over B.E. 2008-09 to Rs.12,000 crore in B.E. 2009-10. NHAI will also be provided Rs 8,578 crore from the Central Road Fund. In addition, the Govt has also provided for a grant of Rs 1,988 crore to the states. This

will be funded from the Central Road Fund. Rs. 1,062.50 crore have been allocated towards maintenance of national highways.


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Rs. 4,140.55 crore allocated towards development of national highways,expressways, special programme on development of road connectivity in naxalaffected area.

Rs 3,484 crore towards grant assistance to States for construction of certain strategicroads in the border areas being executed by the Border Roads

Development Board (BRDB) and stretches of national highways entrusted to theBRDB.

Projects for the benefits of the North Eastern areas -Rs 1,511 crore

5. Ports & Shipping

The budget outlay for the Ministry of Shipping was increased by 45% to Rs 1755.53 crore.More importantly, the formation of the separate Ministry of Shipping from the erstwhilecombined Ministry of Shipping, Road transport and Highways has been welcomed by theindustry. It is perceived that a separate Ministry will attract greater focus and attention for the

Indian shipping industry.The new Shipping Ministry has indicated its intention of more public private partnershipprojects for building ports, speedier acquisition of ships and equipments in its 100 days actionplan. All this taken together, projects as well as policy implementations can definitely beexpected to be on the fast track.The budget highlights the following for the sector:-

The budgetary allocations for ship building (including subsidies to shipyards) havealso gone up from Rs 230 crore in the previous year to Rs 545 crore in 2009-10.

Rs. 490 crore have been for provided for payment to Kolkata Port Trust for dredgingand maintenance of river Hooghly and Haldia Channel and expenditure onestablishment of Minor Ports Survey Organisation.

The IEBR target for the major ports has been increased from Rs 775 crore in 2008-09to Rs 1525 crore in 2009-10.


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IMPACT

The States Transportation Programs and How They Are Funded

State Transportation Improvement Program (STIP) is the states ongoing five -yearprogram of projects to enhance and expand the capacity of the highways and transitsystems. The STIP is funded mainly from a portion of Proposition 42 gasoline salestax revenues deposited in the Transportation Investment Fund and from funds in thePublic Transportation Account.

State Highway Operation and Protection Program (SHOPP) is the states ongoingfour- year program of projects to repair and rehabilitate the states highways and toimprove the systems safety. The SHOPP is funded from the State Highway Account,which receives funding from the states 18 cents per gallon gas tax and from truck weight fees.

Proposition 1B approved by voters in 2006 provides one-time funding from generalobligation bonds for various specific transportation programs, mainly to expand thecapacity of the states highways and transit systems.

Traffic Congestion Relief Program (TCRP) is a statutorily created one-time programto fund 141 specific highway and transit projects. The TCRP was funded from thestates General Fund and a portion of the states gasoline sales tax revenues. Due tostate budget problems, much of the funding was loaned back to the General Fundbefore it could be used on projects.

Since 2001 02, transportation funds have been used to help balance the states budget.Because the decisions to do so are made annually, depending upon the states overall budgetrequirements, it is difficult to predict from year to year (1) how much transportation moneywill be redirected to help the General Fund and (2) the funding source from which the moneywould be redirected. As a result, it is not possible to determine which programs and projectswould be affected until after budgetary decisions are made. The resulting instability andunpredictability of funding delays project progress, complicates efforts to plan for futureprojects, and creates inefficiencies in the department.

Transportation Loans Increase Instability and Will Delay Projects. In the current year,$231 million was loaned from SHA and other accounts to help balance the states budget.These funds are required to be repaid by June 30, 2011. This means that some projects thatrely on SHA money, mainly highway repair projects, will not progress in 2008 09 asoriginally scheduled in the SHOPP. Instead, these projects will be pushed out to later years.

A positive move is that the dedicated freight corridor on the Ludhiana Kolkata route wouldbe inaugurated. Also, work on the Delhi Mumbai stretch has started. This will smoothen thefreight traffic movement and reduce the congestion of the operative lines and also bring intime efficiency in the freight business.

The rail freight sector is expected to get a boost, with the railways deciding to introduce newhigh-capacity wagons. This will help augment the business of the customers since they willbe able to transport more than what they did earlier.


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Speaking on the impact on the Road Freight sector there may not be any immediate impact,however, the end customer will benefit with better coordination between the Rail-Roadfreight sectors. This way the Rail & Road collectively can enhance productivity andefficiency of the Indian Logistics sector.

The Railway Budget 2009 led to increased spending on development activities,rationalisation of freight rates and a substantial rate difference between peak and normalrates. PPP initiatives enhanced Railways capacity to earn higher revenues on a sustainablebasis.

For the aviation sector the Budget 2009 emphasized on revamping of airports and this is seenthrough modernisation of Delhi and Mumbai airport, to name a few. Further, new airpor ts arealso being set up in various cities across the country (Greater Noida, Hyderabad etc.). Otherthan this the aviation sector had its own setbacks either due to the ATF crisis or Airlineworkers/pilot strikes.

The govt. is planning to increase the investment in infrastructure to more than 9% of GDP by2014. Funding to railways has been increased to 15800 crores and that to National HighwaysAuthority of India (NHAI) for the National Highways Development Programme (NHDP) isbeing stepped up by 23 per cent over the 2008-09 (BE).

A much needed thrust given to the infrastructure sector definitely speaks about the govt.sintent to expedite the inclusive growth process taking both the urban and rural India under its umbrella. But mere announcement of multiple projects does not suffice; theirimplementation has been a chronic problem for India. However the finance minister hasurged his colleagues in the central and state governments to remove policy, regulatory andinstitutional bottlenecks for speedy im plementation of infrastructure projects. The stepsannounced should help the real estate sector recover which was hit hard during the downturnin the past fiscal year. The exemptions on goods manufactured on site will give a further pushto the construction industry.

FDI in transport sector in India:The FDI caps in India sector wise and their entry route for the transport sector is given

below:

Sector Ownership Limit Entry Route Remarks

Roads 100% Automatic Includes construction and

maintenance of roads, highways,

bridges and tunnels.


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Ports 100% Automatic Applies to construction and

maintenance of ports.

Airports 100% Automatic FIPB beyond 74% for existing

airport.

Domestic

Airlines

49% Automatic Subject to no direct or indirect

equity participation by foreign

airlines. FDI up to 100% allowed

for NRIs.

Cargo,

chartered andNon Scheduled

Airlines

74% Automatic Investment up to 100% allowed

for Non-Resident Indians.

Ground

Handling

Services

74% Automatic Investment up to 100% allowed

for Non-Resident Indians

MRO, flying

training and

technical

institutes

100% Automatic


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Annual budgetary allocation on transport:Trends in Rail-Road Modes in Freight & Passenger Traffic

Year Goods(Billion Tonne KM ) Passenger(Billion Passenger

KM) Road Railways** Road Railways** 1950-51 6.0*(13.8) 37.6(86.2) 23.0*(15.4) 66.5 (84.6) 1960-61 14.0(16.2) 72.3(83.8) 80.9(51.0) 77.7(49.0) 1970-71 47.7(30.1) 110.7(69.9) 210.0(64.0) 118.1(36.0) 1980-81 90.9(38.1) 147.7(61.9) 541.8(72.2) 208.6(27.8) 1990-91 145.1(38.1) 235.8(61.9) 767.7(72.2) 295.6(27.8)

1999-2000 467.0(60.5) 305.2(39.5) 1831.6(81.0) 430.7(19.0) 2000-01 494(61.3) 312.4(38.7) 2075.5(82.0) 457.0(18.0)

2010-2011 756 482 4189 564

Projection during Eleventh Plan and the Allocation

for 2010-2011

Roadways:

The elasticity of tonne kilometres by road transport with respect to GDP is found to

be a little above unity (1.1). Using an elasticity of 1.1 of BTKM (Billion

Tonne Kilometres) with respect to GDP, four alternative scenarios for BTKM over the

Eleventh Five Year Plan have been projected, for alternative GDP growth rates of 7,

8, 8.5 and 9 per cent as given in the Approach Paper to Eleventh Plan. The

projected BTKM made by the Sub Group for alternative growth scenario may be

seen in table below

Eleventh Five Year Plan Projections for Freight (2007-08 to 2011-12)

Year BTKMs Projections

(BTKMs) 2005-06 706* 2006-07 768#

(Assumption of GDP target rate of growth) 11th Plan 7% 8% 8.5% 9% 2007-08 827 835 840 844 2008-09 891 909 918 927 2009-10 959 989 1004 1019

2010-11 1033 1076 1098 1120 2011-12 1113 1171 1200 1231


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The Committee on Infrastructure headed by the Honble Prime Minister has proposed amassive National Highways Development Programme from (2007-2012) which envisagesthe following:

Sl. Name of Project Likely Cost No. (in Rs. Crore) 1. Completion of GQ and EW-NS corridors 52434 2. 4-laning of 11,113 km under NHDP Phase-III 72454 3. 2-laning with paved shoulders of 20,000 km of National 27800

Highways under NHDP Phase-IV4. 6-laning of selected stretches of National Highways under 41210

NHDP Phase-V

5. Development of 1000 km of expressways under NHDP 16680Phase-VI

6. Construction of ring roads, flyovers and bypasses on 16680selected stretches under NHDP Phase-VII.

Total 227,258

NHDP Phase-IV: Under this, selected stretches of about 20,000 km of NHs are envisaged tobe improved to 2-lane standards with paved shoulders. The programme is yet to beapproved by the Govt.

NHDP Phase-VII: This proposed programme envisages construction of ring roads, flyoversand by-passes on selected stretches on National Highways for an estimated cost of about

Rs 16,680 crore. The programme is yet to be approved by the Govt.

All the above mentioned projects will be financed through various sources of funds like cess, loan assistance from the World Bank and ADB, borrowings by NHAI,estimated surplus amount available from the users fee as well as the share of privatesector. Various sources of funding to finance these projects have been finalised and thefinancing plan implementation by the year 2015 by has been approved. The requirementof funds during the 11th Plan (2007-2012) for implementation of NHDP has been workedout. The total amount required during this period is about Rs. 1,73,501 crore. Theprojected availability of fund from various sources during eleventh Plan period ( 2007-2012) are as below:

S. Funding Source Amount (Rs. No. Crore)

1 Cess 36,589 2 External Assistance 4,454 3 Borrowings by NHAI 41,615 4 Surplus from the user fee 3,108 5 Share of private sector 87,735

TOTAL 1,73,501


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Development of the National Highways with the Border Roads Organizations (BRO) The total length of National Highways entrusted with the Border Roads

Organization (BRO) at present is about 5,512 km passing thorugh the States / UTs of Andhra Pradesh, Arunachal Pradesh, Assam, Chhattisgarh, Himachal Pradesh, Jammu &Kashmir, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura,Uttarakhand, West Bengal and Andaman & Nicobar Islands.

The assessed requirement of funds for improvement of National Highways with BRO

is Rs. 2,500 crore for the 11 th Five Year Plan. New National Highways

A road vision 2021 was prepared in the Ministry, which proposes a total NationalHighway network of about 80,000 km by the end of the year 2021. At present, NationalHighway network stands about 66590 km which requires additional declaration of about13410 km of state roads as National Highways to achieve this target of 80,000 km. Becauseof emphasis on infrastructure sector given in recent years than it was when the Visiondocument was prepared it may be desirable to achieve the target in next 2 Plan years (by2017) instead of next 3 five year plan (by 2022). The target for new addition of length in NH

network in 11th Five Year Plan would be about 7000km. For expansion of the NH networkthe following factors need to be kept in view.

Connecting industrial complexes, important growth nodes, pilgrimage and touristcenters and and places of economic importance.

Filling up the grid in pockets of various regions without a National Highway. Providing linkages with adjoining countries.

Estimates of Manpower Requirement during(2007- 2012)

Railways:

Four scenarios were built based on the assumption of GDP growth rate of 8% and 10%and rail transport elasticity of 0.72 and 0.87, with 2005-06 as the base year. Table belowsummarizes the results obtained for each scenario.

Year Bus Goods Vehicles Public Sector Private Sector HCV/LCV

Drivers Conduc Others Total Drivers Conduc Others Total Drivers Others Total Tors tors 2007 297992 297992 37590 953574 1651130 825565 1651133 4127824 8552086 4276043 12828129 2008 303074 303074 363689 969838 1780041 890021 1780041 4450103 9115018 4557509 13672528 2009 308244 308244 369892 986380 1919094 959547 1919094 479736 9715005 4857503 14572508 2010 313501 313501 376201 1003204 2069030 1034515 2069030 5172576 10354486 5177243 15531729 2011 318848 318848 382618 1020314 2230722 1115361 2230722 5576804 11036060 5518030 16554090

2012 324286 324286 389144 1037717 2405090 1202545 2405090 6012726 11762497 5881249 17643746 Note: Basis of estimation-Public sector-2.5 Nos. of drivers, 2.5 Nos. of conductors and 3 Nos of other staff per bus; in case of private sector requirement is placed at 2 nos. of drivers, 1 no of conductor and 2 nos. of other staff per bus


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Forecasts of Traffic - Different Scenarios (Tonnes and NTKMs)

Year Mtonnes BTKMs Mtonnes BTKMs Mtonnes BTKMs Mtonnes BTKMs 2006-07 688 457 704 472 748 497 765 508 2007-08 737 487 765 511 801 532 832 552 2008-09 789 520 833 554 858 570 906 602 2009-10 845 554 907 600 918 610 986 655 2010-11 905 591 988 651 984 653 1074 713 2011-12 971 631 1079 708 1055 701 1173 779 * GDP growth 8per cent, Rail Transport Elasticity .72 ** GDP growth 10per cent, Rail Transport Elasticity .72 *** GDP growth 8per cent, Rail Transport Elasticity .87 **** GDP growth 10per cent, RailTransport Elasticity .87

Railways market share in the Parcels and Express Cargo is only about 1.5 per cent of the total. Railways would plan to make a major inroad in the business and aim atdoubling of the volume and a five-fold increase in earnings (from Rs. 650 crorescurrently to about Rs. 3000 crores).

Parcel Business Projections

Year Tonnage (million tones)

2007-08 7.15 2008-09 7.86 2009-10 8.65 2010-11 9.50 2011-12 10.45

Passenger traffic is subject to supply- side constraints in some cases and is also highlysensitive to passenger fares; dips in demand are invariably associated with upward revisionsin fares. Although the growth rate of passenger traffic was only 2.17 per cent during the firstthree years of Tenth plan period, there has been a substantial pick-up in growth in the latteryears .This provides an optimistic setting for the Eleventh Plan period. Three scenarios of passenger growth have been worked out with sub-urban growth rates between 3 to 4 per cent,non-suburban, between 7 to 8.5 per cent and overall growth rates between 5 per cent and 6per cent. (Table below)


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Projections for Originating Passengers (In Million)

YEAR SUBURBANNON-SUBURBAN

TOTAL

2006-07 3646 2596 6242(BE)

Proposed Growth Rate Proposed Growth RateProposed GrowthRate

Sc. 1 Sc. 2 Sc. 3 Sc. 1 Sc. 2 Sc. 3 Sc. 1 Sc. 2 Sc. 3

2007-08 3908 3920 3927 2811 2831 2830 6720 6751 67572008-09 4026 4049 4065 3030 3059 3071 7056 7108 71362009-10 4146 4183 4207 3262 3319 3332 7408 7502 75392010-11 4271 4321 4354 3508 3601 3615 7779 7922 79692011-12 4399 4463 4507 3768 3908 3922 8168 8371 8429Compounded GrowthRate (inpercentageterms)

3 3.3 3.5 7.7 8.1 8.5 5 5.5 5.6

The opening up of the economy, renewed emphasis on passenger business and the increasedpropensity to travel has resulted in the increase in the number of passengers. Keeping in viewthese factors it is expected that there will be 3 per cent growth in suburban traffic whileoverall passenger traffic (suburban and non-suburban) is expected to grow at the rate of 5 percent per annum.

The share of upper classes in the overall passenger traffic is less than 1 per cent and that inthe non-suburban segment slightly higher at 2 per cent. However, its share of the overallpassenger earnings is much higher at 18 per cent. It is expected that with increasingprosperity and aspiration levels, the current trend of higher growth of upper-classesespecially AC-3 Tier would continue. Class -wise projections of growth of non-suburbanpassenger traffic has been worked out on the basis of this assumption and is given in Tablebelow.


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Projection of Growth of Non- Suburban Passengers (in Millions) Class 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Percentage

1st

AC growth (in %)

1.30 1.37 1.43 1.50 1.57 1.63 5 2

nAC 13.55 13.96 14.38 14.81 15.25 15.58 3

3r AC 23.37 25.24 27.38 29.84 32.54 35.06 10 First 0.75 0.45 0.27 0.16 0.09 0.00 -20 M/Exp. First 2.19 1.31 0.79 0.47 0.28 0.00 -20 Ordinary ACCC 10.68 11.21 11.83 12.54 13.36 14.42 7 Sleeper 190.70 204.05 219.35 236.90 257.04 276.52 9 M/Exp. Sleeper 4.95 5.05 5.16 5.29 5.48 5.69 3 Ordinary Second 525.46 567.04 611.16 657.96 707.58 760.19 8.93 M/Exp. Second 1832.19 1981.61 2138.28 2302.58 2474.90 2659.82 9.03 Ordinary Total 2605.14 2811.29 3030.03 3262.05 3508.09 3768.91 8.93

Strategies for the Plan The Eleventh Plan passenger traffic projections are shown in Table below. In terms of originating passengers it is expected that the Railways will carry 8400 million passengers

by the terminal year of the Plan.

Projections of Passenger Traffic2006-07 (RE) 2011-12

Originating Passengers (in 6242 8400millions)Passenger Kilometers (in 700 880billions)

The Plan will focus on reducing the cost of operations, developing attractive servicepackages, and adoption of competitive pricing to safeguard share of upper class travel vis--vis airlines.


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Shipping:


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Aviation:

Documents

Pre Budget Transportation Analysis