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Friday, February 13, 2009

DG - Interim Rail Budget 2009-10: Sharekhan Railway Budget Special dated February 13, 2009

 

Railway Budget Special
[February 13, 2009] Please see the attachment for details

Sharekhan
www.sharekhan.com

Summary of Contents

RAILWAY BUDGET SPECIAL

Interim Rail Budget 2009-10

Capex flat; operating performance deteriorates
In his last budget before the general election, Rail Minister Lalu Prasad Yadav did not spring any surprise, with his speech highlighting the achievements of the Indian Railways in the last five years. While the freight rates were left unchanged, the passenger fares were further slashed by a modest 2% in the budget. Despite higher expenditures, particularly the employee cost, the Indian Railways continue to be profitable while its capital expenditure (capex) has also been sustained. However, with the implementation of the Sixth Pay Commission’s recommendations, the operating ratio has deteriorated, as it is estimated to rise to 88% in FY2009 and reach higher to 89.9% in FY2010, according to the budgeted estimates. 

The government expects the freight loading to increase by 7.1% to 910 metric tonne in FY2010 while the number of passengers is also likely to grow by 7% during the next fiscal. Though the government has announced plans to conduct a feasibility study for bullet trains on a number of routes, it has also emphasised that the work on the eastern dedicated freight corridor has already started from February 10, 2009 while the construction work on the western freight corridor would begin later this month.

Regards,
The Sharekhan Research Team

myaccount@sharekhan.com

 
 

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