The Indianpost

Rail Budget 2011 review: Nirmal Bang

Railway budget – “Election Manifesto”!
The Railways budget announced today seems to be more of a populist one as election in West Bengal is approaching. The major focus was on West Bengal, while rest of India was ignored. Railway budget was announced targeting common man, as there was no increase in passenger fares. The freight rates were also not increased considering high inflation level in the economy. We expect such more measure to tame inflation in upcoming Union budget on 28 Feb. 2011.
Addition of 700 km new lines in one year:
The government has announced that there will be an addition of 700 km new lines in 2011-12. Though it is planned lower than previous year of 1000 km but emphasized on aggressive implementation in next year which had always leged in the past. In the current year till date railway has put up 150 km of new line as compared to target of 1000 km. The government has taken more aggressive steps by setting a target of 25,000 km new lines over next 10 years. If implemented, we feel this can act as a positive factor for the railway companies like Kalindee Rail, ARSS Infra and Stone India.
Implementation of ACD:
Anti Collision Device (ACD) to be commissioned on three zonal railways, Southern, South Central and South Western Railways. With this the railways will covered 8 out of 17 zonal railways. This can act positive for Karnex Microsystem.
New initiatives taken by the government:
To meet the increasing demand of rolling stocks, the government has initiated to set up various plants and manufacturing facilities. It includes:
To set up a coach factory in Palaghat
To set up a metro coach factory in Singur
To set up a diesel locomotive centre in Manipur
To set up a coach factory in Kolar via Public Private Partnership (PPP) or Joint Venture (JV)
To set up two more wagon unit at Kerela
To set up a bridge factory in Jammu and Kashmir
To set up an industrial park in at New Bongaigon, Nandigram
Government emphasis of setting up various factories has given a negative signal to rolling stock manufacturers which led to a sharp fall in stock prices of some of the players like Titagarh Wagons, BEML and Texmaco.
Key Budget Highlights:
Gross Traffic Receipts estimated at Rs.1,06,239 crore exceeding one lakh crore mark for the first time.
Excess (Surplus) projected to be Rs 5,258 crs for FY 2012 as against Rs.4,105 crs (revised) for FY 2011
Emphasis on Public Private Partnership (PPP) by the government and has obtained 85 proposals for PPP
The total capex allocated for rolling stocks is Rs. 13,824 crs
To aim 700 km of annual rail line addition
To construct 172 rail over bridges
To double spending on gauge conversion to Rs 2,470 crore
To spend Rs 9,583 crore for new lines in FY12
Anti Collision Device (ACD) to be commissioned on three zonal railways, Southern, South Central and South Western Railways. With this the railways will have covered 8 out of 17 zonal railways.
All unmanned level crossing upto 3000 to be eliminated
To acquire 18,000 new wagons in next one year. There is no year over year increase in the target
The freight loading for FY 2011 was 924 mt against target of 944 mt (decline of 20 mt). The government has kept an ambitious target for FY 2012 at 993 mt
Other Highlights:
236 more stations to be upgraded as Adarsh Stations
IRFC to borrow Rs 10,000 crs rupees via tax-free bonds FY12
FY12 Disaster Relief Fund appropriation Rs 7,000 crs rupee
Set up single window for public-private partner project
To create fund to implement socially desirable plans
Government has proposed to set up various power plants at Bihar, Andhra, Agra and Maharashtra cumulating 4320 MW
Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its advises users to check with certified experts before taking any investment decisions.

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