Railway Budget 2016-17: Reorganize, Restructure & Rejuvenate

Highlights of Railway Budget 2016-17

Suresh Prabhu has set out an ambitious medium-term goal to reset the country’s oldest institution, including its governance, and restore its key place in the Indian economy. Railway is facing twin challenges of finances and ability to be a growth driver for the economy

Few Glimpses of Railway Budget 2016-17

  • The minister fixed the revenue target for next fiscal at Rs.1.84 trillion, marginally above the budget estimate of 2015-16, though it failed to achieve its target for this year by a big margin
  • Railways will have to bear the burden of an additional payout of Rs.28,000 crore as part of the 7th Pay Commission recommendations
  • The railways will end up with operating ratio of 90 for 2015-16. For 2016-17, it expects the operating ratio to further worsen to 92 
  • No changes in passenger fares and freight rates



There is shortfall in traffic receipts worsened by low freight demand from core sector. The Railway minister outlined the medium-term plan of investing Rs.8.5 trillion by 2019-20. The investment plan for 2016-17 is Rs 1,21,000 crore –

  • Transfer from the Union budget – Rs.45,000 crore
  • Internal resources – Rs.12,700 crore
  • Partnerships with state governments – Rs.18,000 crore
  • Life Insurance Corporation of India – Rs.23,000 crore
  • Indian Railway Finance Corporation – Rs.21,700 crore

Do you know about Sundry earnings of Railways?

Sundry Earnings: All earnings on add-on services (which are not free of cost), including WiFi, concierge service, advertising, etc. Simply put, Railway puts all its non-tariff earning as Sundry Earnings in its account books. 

These earnings stood at an estimated Rs. 6229 crore this year.

Budget Proposal

  • The target of non-tariff earnings for next year has been scaled up by 53% to Rs. 9590 crore
  • Advertising is a major source of non-tariff revenues. So, Railways will install around 20,000 screen across its ecosystem to display ads
  • The Railways will also monetise its data bank on passengers so that frequent travellers get value-added, targeted services
  • Railways to monetise land on tracks by leasing out for horticulture and tea plantation
  • Holding company to be explored for monetising assets of Railway companies


Challenge: The freight business provides two-thirds of Indian railways’ revenues, but it is struggling with capacity constraints and slow industrial demand. Also, our freight rates are among the highest in the world, which make our products uncompetitive.

Budget Proposal: To expand the list of commodities it services—increasing it to 40 from nine at present by including automobiles, packaged consumer goods, cotton, fruits and vegetables.

Dedicated Freight Corridors: It is proposed to take up the following freight corridors:

  • North-South connecting Delhi to Chennai,
  • East-West connecting Kharagpur to Mumbai
  • East Coast connecting Kharagpur to Vijayawada

Impact: They can radically slash transit time for goods. Also, shifting of freight traffic from existing tracks to the new corridors would release capacities, helping increase speed of passenger trains.

Criticism: The high freight rates have diverted railway traffic to roads. In fact, discounting for the fuel component in freight charges, the rates should have been reduced this year.

New Trains

The budget announced 4 new types of trains:

  • Antyodaya Express: A long-distance, fully unreserved, superfast train service, for the common man, to be operated on dense routes
  • Humsafar: It will be a fully air-conditioned train for the budget passengers
  • Tejas: It will showcase the future of train travel. It will travel at 130 km an hour and offer on-board WiFi services
  • Uday: It will be an overnight double decker service for the busiest routes in the country with 40% more carrying capacity

Better Governance

Challenges: Departmental orientation, absence of cross-functional collaboration and lack of business focus

Budget Proposal: To reorganize the Railway Board along business lines and suitably empower Chairman, Railway Board to lead the organization effectively

Vulnerable Sections : Old People/ Disabled/ Women/ Porters

  • A “Saarthi seva” will be introduced to help the old and disabled at stations. Railways to increase lower berth quota for senior citizens by 50%.
  • Disabled enabled toilet in 11 Class-A stations this year
  • 33% reservation to women in reserved quota in Railways
  • Porters to be called ‘Sahayaks’ now. They will be trained in soft skills


  • 17000 bio toilets and additional toilets at 475 stations will be provided before the close of this year
  • World’s first Bio-Vacuum toilet was developed by IR and is being used in Dibrugarh Rajdhani Express
  • For those queasy about train travel because of dirty toilets and coaches, the minister has “clean-my-coach” on demand through SMS

Improving Railway Stations

  • 400 stations to be re-developed through PPP
  • Beautification of stations at pilgrimage centres: Ajmer, Amritsar, Gaya, Mathura, Nanded, Nashik, Puri, Tirupati, Varanasi, Nagapattinam and others


  • 400 railway stations to be equipped with wifi, 100 this year.
  • To reduce the waiting period for passengers, the railways will introduce bar-coded tickets at select stations.
  • Scanners and access control on a pilot basis on major stations.

Railway Budget: Few Shortfalls

  • There is a shortfall in the number of engines required to run even our existing fleet of freight and passenger vehicles. With increased capacity, we will need many more locomotives. The budget does not indicate a comprehensive strategy for these issues
  • Most tracks and rolling stock are already fit for speeds above 100 kmph for passenger services and above 75 kmph for goods services. However, average speeds of passenger services are around 40-50 kmph and those of freight 20-25 kmph. This is because we don’t have the capacity to run them at optimum speed. Increasing capacity by doubling/ quadrupling lines would in itself improve speeds. Budget does not have much to offer to overcome this lacunae

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Published with inputs from Pushpendra

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