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‘Dedicated freight corridor could have major impact’
The Rail Budget for Finacancial Year 2017 promised to fasttrack India’s long-term goals for economic well-being.
Chennai
The decline in operating ratio from 88% to 90%, and to 92% for next year is along expected lines, with freight and passenger traffic remaining nearly flat, and expenses continuing to increase.
In this context, how the increased investment target of Rs 1.2 lakh crore will be met, becomes more pertinent. In fact, for the five-year target of Rs 8.5 lakh crore, set last year, the annual spends will need to continue to grow faster. There are reasons to be optimistic.
- Several steps have been taken to speed up contracting and execution of contracts, and construction companies are already seeing their order books grow. Private Freight Terminals are growing. However, the port connectivity projects, JVs with State Govt and 4 BOT Annuity projects, remain work-in progress. That new project announcements are limited indicates adherence to implementation focus, highlighted in the previous Budget.
- Among the new announcements, East coast connectivity through Dedicated Freight Corridor is perhaps the most impactful, as it would contribute to India participating in global production networks in south east Asia, and to Make in India.
- The proposed rationalisation of freight tariffs will be critical to improving financial health, and enabling investments. Railways have become less competitive than road even for 1,200 – 1,500 km distances for container movements. Coastal shipping and Inland waterways are also emerging as competition.
The writer is Partner and Leader - Infrastructure, PwC India.
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