Railway Budget 2011-12 was more of election budget as expected. Though planned outlay has been increase to all time high to Rs 57630 cr, clear roadmap to achieve the vision 2020 and to meet challenges of meeting requirement of emerging India were clearly missing. Another worrying news is that in our view the 2011 Railway Budget missed an opportunity to raise passenger charges to pass on rising fuel costs when growth is strong.
Rail Budget 2011-12 proposes to spend R 57630 cr during FY12 which is almost 39% higher than previous budget allocation of R 41426 cr. The plan is proposed to be financed through Gross budgetary support of R 20000cr, Diesel cess of R 1041 cr, internal resources of R 14219 cr and market borrowings of R 20594cr [Now Equity Analysts will start mentioning about the Railway Deficit in their Reports]
Railway suffered heavily due to implementation of 6th pay commission recommendation during FY10 and is yet to recover from it. Rather than taking concrete steps to control spiraling manpower cost, it has plans to hire additional 200000 employees in FY12 which will put additional burden on its sagging financials and will further put pressure to increase freight rate. It expects to raise freight rate by approx 6.5% in FY12E.
No visible progress has been made till date on meeting the Wagons Deficit. We would like to conclude that the budget looks like typical pre election budget for Railway minister rather than future growth plan for Indian Railways.