RAILWAY BUDGET 2017 -2018 : MAJOR EXPECTATIONS

RAILWAY BUDGET 2017 : MAJOR EXPECTATIONS

Live Updates : Railway Budget 2017

In pursuant of the Budget announcement, for increasing the Non Fare Revenue, Ministry of Railways already announced new policies on various initiatives within the Non-Fare Revenue space. Railway Minster inaugurated the following policy initiatives viz.,  Policy Initiatives of Increasing Non Fare Revenue like Out of Home Advertisement, Content on demand, Branding of Trains, Non-fare Revenue Policy, ATM Policy. 


Salient Features of the Policies:


  • The policies are based on feedback from the key players in the industry. Some of the key inputs considered in the policies are:
  • Long Term Contracts – 10 years
  • Single Point of Contact within Indian Railways - Non Fare Revenue Directorate
  • Credibility of Partner - including a technical and financial capability model
  • Transparent Process - E- Auction
  • Better media planning for Railway assets – Allowing zone/train/station wise packages


Key Policies:

Non-Fare Revenue Policy:

  • The objective of the policy is to allow Indian Railways to consider unsolicited proposals of earnings through Non-Fare sources
  • An NFR Evaluation Committee at Divisional/Zonal level shall examine need, operational and legal feasibility of the project and technical and financial capacity of the proponent
  • Agencies will selected on the basis of transparent tendering process via E-auction
  • Right of First Refusal to be offered to the proponent to match the highest bid
  • Indian Railways shall offer Non-Fare revenue contracts for a tenure of five years
  • The Non-Fare Revenue Policy shall enable private/public sector participation in conceptualization of an earning scheme
  • Entire exercise shall be cost-neutral to the Indian Railways


Out of Home Advertising Policy:

  • The objective of the policy is to allow monetisation of Railway Assets by means of advertising
  • Indian Railways had appointed RITES as consultant who appointed Ernst & Young as Professional Media Market Evaluation Agency (PMMEA)
  • In addition to the existing identified sites, Indian Railways shall allow advertising at areas hitherto unused, i.e., area along tracks, Road Over Bridges, Level Crossing Gates etc.
  • Static advertising will not be permitted in the station buildings, platforms, foot over bridges (leading to station area), etc., as it is covered in Rail Display Network
  • Indian Railways shall allow all forms of advertising, including digital to make the most use of advertising potential.
  • The advertising rights to be awarded for ten years
  • The advertising asset package sizes to be offered for bidding for zones/ clusters of zones, separately for Mumbai and Delhi area
  • The advertising assets to be offered via a transparent E-auction process
  • More than INR 6,000 Cr is expected to be generated by the end of the contract


Train Branding Policy:

  • The objective of this policy is to augment advertising revenue of Indian Railways by allowing internal and external advertisement
  • This policy will help in realizing economies of scale and give more marketing flexibility, thereby leading to higher realization of earnings for Indian Railways.
  • Indian Railways had appointed RITES as consultant who appointed Ernst and Young as Professional Media Market Evaluation Agency (PMMEA)
  • Advertisement through vinyl wrapping of train exterior (including windows of AC coaches) and inside the coaches shall be allowed
  • The tenure of the contract shall be 10 years.
  • The train branding packages sizes shall be offered for bidding in a phased manner (e.g. Rajdhani package, Shatabdi package etc.)
  • The advertising assets to be offered via a transparent E-auction process
  • More than INR 2,000 Cr is expected to be generated by the end of the contract

Content on Demand and Rail Radio Policy:

  • The objective of this policy is to allow monetization of entertainment based services on trains and stations
  • Entertainment services shall be provided through audio (P.A systems) and video systems (personal devices of the passengers)on trains and platforms
  • Provision of content such as movies, shows, educational programs shall be in both paid and unpaid formats
  • Indian Railways shall offer Content on Demand services contract for a tenure of ten years
  • The assets to be offered via a transparent E-auction process
  • More than INR 6,000 Cr is expected to be generated by the end of the contract

ATMs Policy:

  • The objective of this policy is to allow setting up ATMs at major stations of the Indian Railways
  • Indian Railways shall offer ATM on Stations contracts for a tenure of ten years
  • The location of the ATM shall be on end platforms or prominent space in the circulating area of the station
  • The assets to be offered via a transparent E-auction process
  • More than INR 2,500 Cr is expected to be generated by the end of the contract


Updated 31.01.2017
February 1st i.e on coming Wednesday our Finance Minster will present the Railway Budget along with the Union Budget. 2017 will go down in history as the first year when the Railway Budget was subsumed in the General Budget. Major expectations about the Railway Budget according to major Newspapers are following.


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Railway Budget 2017 to focus on safety, infrastructure development : A safety fund of Rs 20,000 crore for railways reeling under a series of deadly derailments, development of new lines, station redevelopment and setting up of Rail Development Authority and High Speed Rail Authority will be in focus.
Budget 2017 - 2018
Railway Budget 2017 - 2018
The Railway Ministry may significantly hike fares for second class and AC 3-tier journeys to fund its safety corpus. A fare hike would boost the finances of the Railways, which expects Rs 1.84 lakh crore revenues in the currency financial year, but has already lowered its revenue expectations to Rs 1.7 lakh crore in the revised estimates. Earlier this month, Prabhu said the Railways is expected to have an operating ratio of 94 percent for the current financial year despite the huge Rs 32,000 crore liability of Seventh Pay Commission and negligible growth in the freight loading. In last year’s Budget, the railway minister had targeted an operating ratio of 92 percent.  A combined Budget may also save the Railways Rs 10,000 crore, with the ministry having sought an exemption from paying dividends to the Center this year, prompted by a rise in additional salary and pension spending for its 1.3 million employees.  The ministry is also trying to reduce charges on freight, which accounts for a larger portion of the Railways’ revenue, to prevent cargo from moving to other transport modes, and has reduced parcel sizes and average distances.
A fare hike would boost the finances of the Railways, which expects Rs 1.84 lakh crore revenues in the current financial year, but has already lowered its revenue expectations to Rs 1.7 lakh crore in the revised estimates. Earlier this month, Prabhu said the Railways is expected to have an operating ratio of 94 percent for the current financial year despite the huge Rs 32,000 crore liability of Seventh Pay Commission and negligible growth in the freight loading. In last year’s Budget, the railway minister had targeted an operating ratio of 92 percent.  A combined Budget may also save the Railways Rs 10,000 crore, with the ministry having sought an exemption from paying dividends to the Center this year, prompted by a rise in additional salary and pension spending for its 1.3 million employees.  The ministry is also trying to reduce charges on freight, which accounts for a larger portion of the Railways’ revenue, to prevent cargo from moving to other transport modes, and has reduced parcel sizes and average distances.

Government May Make Aadhaar Card Must For Rail Concession : Government is contemplating to make Aadhaar or Unique Identification (UID) card mandatory to avail rail concession, and an announcement is likely to be made by Finance Minister Arun Jaitley.  The move will help the government in better targeting of benefits and check misuse of the facility, sources said. The Railways provides concession on tickets to more than 50 categories of passengers which include senior citizens, students, research scholars, teacher, doctor, nurse, patients, sports people, unemployed youth, Arjuna awardees among others. At present, Railways is running a pilot project for senior citizens who are entitled for rail concessions. The concessional tickets cost the Railways about Rs. 1,600 crore in 2015-16, with the bulk being accounted for senior citizens.


Updated 17.11.2016

The Budget will be presented in Parliament on February 1 next year, a famous News Paper reported. Demonetization decision would have no impact on the Budget process. 

The Government plans to complete the Budget exercise before the end of the financial year on March 31 to enable ministries to spend funds from the start of the year instead of waiting until May for Money to flow in. It will also help in better tax planning, it is opined. 

Merger of Rail Budget With Union Budget 

The Government has decided to merge Rail Budget with the Union Budget from budget year 2017-18, a Government press release said. The merger of Railway Budget with General Budget is based on the recommendations of the Committee headed by Shri Bibek Debroy, Member, NITI Aayog and a separate paper on ‘Dispensing with the Railway Budget’ by Shri Bibek Debroy along with Shri Kishore Desai. A Committee with representatives from Ministry of Finance and Ministry of Railways examined the issues involved and worked out the procedural details.
The salient features of merger and the benefits likely to accrue therefrom are broadly given below:-

  • Ministry of Railways will continue to function as a departmentally run commercial undertaking;
  • A separate Statement of Budget Estimates and Demand for Grant will be created for Railways;
  • A single Appropriation Bill, including the estimates of Railways, will be prepared and presented by Ministry of Finance to Parliament and all legislative work connected therewith will be handled by Ministry of Finance;
  • Railways will get exemption from payment of dividend to General Revenues and its Capital-at-charge would stand wiped off;
  • Ministry of Finance will provide Gross Budgetary Support to Ministry of Railways towards meeting part of its capital expenditure;
  • Railways may continue to raise resources from market through Extra-Budgetary Resources as at present to finance its capital expenditure;
  • The presentation of a unified budget will help present a holistic picture of the financial position of the Government;
  • Merger of Rail Budget with Union Budget would facilitate multi modal transport planning between highways, railways and inland waterways.
  • It will allow Ministry of Finance greater elbow-room at the time of mid-year review for better allocation of resources, etc.
The budgetary support allocated to Railways by the General Exchequer and dividend paid by the Railways to the Government is given below:
Year Budgetary Support (in Crore) Dividend and Interest paid
2011 -2012 20013.44 5784.28
2012- 2013 24131.9 5466.5
2013-2014 27072.4 8008.67
2014-2015 30121.16 9173.55
2015-2016 (Prov.) 35007.87 8722.51

The Capital at charge of the Railways on which annual dividend is paid by the Railways will be wiped off. Consequently, there will be no dividend liability for Railways from 2017-18 while Ministry of Railways continue to get Gross Budgetary support for capital expenditure. This will save Railways from the liability of payment of approximately ` 10,000 crore as annual dividend to the Government of India which after adjusting the subsidy in payment of dividend would give a net benefit of about ` 5000 crore to the Railways.

The Government has decided to merge Rail Budget with the Union Budget from budget year 2017-18. The Budget will be presented in Parliament on February 1 next year. Demonetization decision would have no impact on the Budget process. The Government plans to complete the Budget exercise before the end of the financial year on March 31 to enable ministries to spend funds from the start of the year instead of waiting until May for Money to flow in. It will also help in better tax planning, it is opined.

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