Railway Minister Suresh Prabhu announced a slew of initiatives while presenting the Railway Budget for 2016-17, including the first firm step towards corporatisation of the mammoth network which carries 23 million passengers every day and employs 1.3 million people, besides having an almost equal number of pensioners.
The top business takeaways from the budget include the proposal to set up a planning and investment organisation to prepare medium and long-term corporate plans, examine the feasibility of a holding company for all state-owned railway companies and re-organise the ministry's apex decision-making body, Railway Board.
Here are the top announcements in the rail budget and their corresponding business takeways (in italics):
To set up a Railway Planning & Investment Organisation for drafting medium (five-year) and long (10-year) term corporate plans; identify projects which fulfil the corporate goal.
The move is likely to bring enhanced professionalism in the organisation.
Proposal to examine the feasibility of bringing most of the railway companies under the umbrella of a holding company, which would provide the necessary strength for leveraging the combined resources.
This could be the first step to eventually list railway companies such as RITES, Ircon International, IRCTC and RailTel.
Capital outlay at Rs 1.21 lakh crore for FY2017, 20 percent higher than FY2016.
Suppliers of wagon, coach and other rail infrasctructure will benefit from business contracts.
Life Insurance Corporation (LIC) to lend Rs 1.5 lakh crore to Indian Railways over five years on "favourable terms."
The lending is likely to come in handy for the department's ambitious Rs 8.5 lakh crore, five-year investment plan announced during last year's Railway Budget.
Re-organise Railway Board along business lines and suitably empower the chairman.
This is in line with Indian Railways' efforts to usher in greater operational efficiency.
Decision to set up three new freight corridors and review of freight tariff policy.
Besides resulting in more procurement of wagons and related equipment, the review of freight tariff is likely to result in reducing costs and increasing revenues in the long term. Railways also announced a decision to appoint key customer manangers to interact with freight stakeholders.
Proposal to set up an automobile hub in Chennai and, in the long run, look at establishing logistics parks and warehousing in other parts of the country.
The move will result in new business opportunities for the department, besides bringing in greater synergy between manufacturers and transporters.
Accelerated electrification of railway lines, target to double it to 2,000 km in FY2017.
Turnkey and EPC companies like KEC International will land huge contracts.
Installation of high-tech network of 20,000 screens across 2,000 stations to enable dissemination of real-time information to passengers
The initiative throws up huge ad revenue potential for the Railways, which aims to increase its ad revenues four-fold from the current year.
