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Railway budget 2016-17 by Edelman

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Railway Budget 2016-17: Key highlights | Impact on business and general public

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Railway budget 2016-17 by Edelman

  1. 1. February 25, 2016 Railway Budget 2016-17 Key highlights | Impact on business and general public Greetings, The Railway Budget for 2016-17 as presented in the Parliament today by Hon’ble Union Minister for Railways, Shri Suresh Prabhu proposes a capital plan of Rs 1.21 lakh crore for the year 2016-17. The budget aims to improve customer experience, achieve greater operational efficiencies and meet higher revenue targets without resorting to price hikes. The budget is structured on three strategic pillars – Nav Arjan - New Revenues, Nav Manak - New Norms, Nav Sanrachan - New Structures. Industry reactions are generally neutral to positive as the budget offers greater scope for private sector participation while promising better efficiencies and increased transparency. This note captures the key highlights and summarises major announcements. Please reach out to us should you wish to understand more about the Railway Budget and what it would mean for your business. Best regards, Medha Girotra | Public Affairs Practice Lead
  2. 2. February 25, 2016 Railway Budget 2016-17 Key highlights | Impact on business and general public ‘Nav Arjan’ New Revenues New avenues and innovative models for revenue generation through public-private partnerships (PPP)  Revenue generation for FY17 targeted at Rs. 1,84,820 cr  Develop cold storage facilities on vacant land near freight terminals  Develop rail side logistics parks and warehousing in PPP mode  Station redevelopment through leasing of railway land  Monetising land along tracks and other soft assets – website, data, etc.  Quadruple rise in advertising targets from previous year Three Strategic Pillars ❶ ‘Nav Manak’ New Norms New norms of improving efficiencies to ensure optimal productivity; focus on innovation and optimisation of resources ❷ ‘Nav Sanrachna’ New Structures Re-inventing processes, rules and structures to enhance co-operation, collaboration, creativity and communication ❸  Liberalising the current parcel policies including allowing container train operators  Branch into manufacturing - target annual revenues of Rs. 4,000 cr by 2020  Increased partnerships with State Governments for operating tourist circuit trains  Winning back lost modal share from freight due to increase in charges last year  Targeted commissioning of 2,800 kms of broad-gauge track. Expansion @ 7 km/day against a running average of 4.3 km/day in the last 6 years  Contracts for civil engineering works to be awarded by March 31, 2016  Specialised teams mandated to detect inefficiencies and prevent wastage  Award all works valuing above Rs. 300 cr through EPC contracts  Use the latest drone and geo spatial based satellite technology for remotely reviewing physical progress across major projects  Annualised savings of Rs. 3,000 cr in the next financial year, by procuring power directly at competitive rates using Deemed Distribution Licensee  Rail Development Authority to enable fair pricing of services, promote competition, protect customer interests and determine efficiency standards  Reorganise Railway Board along business lines  Cross functional directorates at Railway Board to monitor non-fare revenues, speed enhancement and information technology  Strengthen PPP cell to improve ease of doing business with IR  Form a holding company for enterprises owned by IR  Railway Planning & Investment Organisation to prepare a National Rail Plan to harmonise rail network with other modes of transport  Appointment of Key Customer Managers to liaise with major freight stakeholders  Special Railway Establishment for Strategic Technology & Holistic Advancement (SRESTHA) for R&D  Special Unit for Transportation Research and Analytics (SUTRA) to carry out detailed analytics leading to optimised investment decisions and operations Impact on General Public  Passenger fares remain unchanged  17,000 bio toilets and 65,000 additional berths  1,780 automated ticket vending and 225 smartcard vending machines  Enhanced capacity of e-ticketing system from 2000 to 7,200 tickets per minute  Wi-Fi in 400 stations by the end of next year  Stations to be brought under CCTV surveillance  Mahamana Express between Varanasi and Delhi  2,500 water vending machines at stations  New trains: Humsafar, Tejas, Uday & Aastha  Introduce bar-coded tickets  E-booking for press pass holders  Milk products, OTC medicines on platforms  ‘Clean my Coach' service through SMS  Further sub-quota of 33% for women  FM radio stations on-board trains
  3. 3. February 25, 2016 Railway Budget 2016-17 Key highlights | Impact on business and general public Impact on Business New Yardsticks for Tendering  EPC projects document finalized; 20 projects through this mode in FY17 will be implemented. By FY18, all works valued above Rs. 300 cr through EPC contracts  Contracts to be reviewed based on performance output parameters to make them outcome focused  Project management through latest drone and geo spatial-based satellite technology  System-wide Information Technology integration has been initiated akin to an ERP framework Institutional Changes  Draft bill on Rail Development Authority to enable fair pricing of services, promote competition, protect customer interests and determine efficiency standards  Railway Planning & Investment Organisation to be set-up to draft medium/long-term investment plans  National Rail Plan 2030 will endeavour to harmonise and integrate rail network with other modes of transport and create synergy for achieving seamless multi-modal transportation Innovative Financing and Partnerships  Capex doubled from an average of Rs 48,100 cr in 2009-14 to Rs 1.21 lakh cr in FY17  Emphasis laid on innovative financing mechanisms to raise capital for projects  New framework for PPP projects established  Joint Ventures with State Governments identified for rail-based projects  Exploring multilateral and bilateral financial investments to source funds, execute projects  Railways to scout international markets for Rupee bonds Improvement of Freight  Expansion of freight basket with freight container for special commodities -- open to all except coal, specified mineral ores and part-loads -- during non-peak season  No increase in freight charges; tariff rationalisation for more competitive rates; permitting multi-point loading-unloading  Building terminal capacity, by developing rail- side logistics parks and warehousing under PPP mode.  Railways to soon inaugurate India’s first rail auto hub in Chennai Contact Us @ Edelman Public Affairs Edelman India’s Public Affairs (PA) practice combines industry, regulatory affairs and communications knowledge to develop and execute PA campaigns based on solid research and insights that inform impactful strategies. We work with our clients to anticipate issues; plan and respond to the emerging challenges at national, state and local levels. At the core of the offering, is the ability to develop long term relationships and maintain constant engagement instead of an ad-hoc approach. Our team of 30 personnel includes senior industry professionals, domain experts, researchers and writers from a wide range of backgrounds. We have access to an extended group of advisors from civil service, media and NGO circles who help us navigate the vast and complex stakeholder universe in India. Edelman India has offices in Mumbai, Delhi, Bangalore and a vast network of representatives in state capitals Follow us: @EdelmanIndiaPA Contact us: Medha.Girotra@Edelman.com

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