Budget 2017: Expect A New Railway Safety Tax As Railways Gear Up For A Safer Future

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In light of the recent accidents involving passenger trains, the government has decided to implement a new railway safety tax to assure all passengers of a safer and more secure future. A new safety fund of Rs. 20,000 crore for the Indian Railways will ensure a safer and a more hi-tech future for the millions of commuters as well. The new fund will be announced tomorrow in the Union Budget 2017. This is the first time that the two budgets have been combined into one entity. The new fund will develop new lines, redesign and develop stations and will set up the Rail Development Authority and the High-Speed Rail Authority. FM Arun Jaitley will present the budget tomorrow.

Indian Rail
The general budget this year has been combined with the rail budget, a first in 92 years

The announcement follows a string of derailments which has seen many lives being lost. More than 150 people died in the Kanpur train accident late last year. The Railways Ministry is also expected to introduce a safety tax which will directly fund the Rashtriya Rail Sanraksha Kosh, which is a corpus of an estimated its 1.2 lakh crore and is a safety body.

This is the first time in the last 92 years that the two budgets have been subsumed into one. No one seriously doubts that the Rail Minister Suresh Prabhu is not a good administrator and an effective minister. On numerous occasions, he has been known to respond directly to tweets from passengers in trouble or who complain of a lack of cleanliness in running trains. However, a serious safety risk is a very real threat.

 New Tax To Increase Fares?

The implementation of the new Railway Safety Tax is certain to have a direct effect on the fares of second class and AC-3 tier tickets. Sources also suggest that ticket prices of AC 1-tier and 2-tier will also increase marginally. The safety concerns have forced the government to create a separate safety fund of about Rs. 1 lakh crore over the next five years. Out of this huge amount, Rs. 20,000 crores have to be earmarked for FY 2017-18.

The Union Budget 2017 is also an occasion to rue the Railways’ sorry state of finances as it will miss the operating ratio target of 92 percent, settling at around 94-95 percent. The budget is also said to announce a new regulatory authority, the Rail Development Authority and the High-Speed Rail Authority. The Budget 2017 will also see utilisation of unused assets like vacant land, estimated at 48,000 hectares, which will be developed by a PPP model.

New Announcements Expected

An ambitious project of speeding up major rail routes will be announced involving the Delhi-Howrah, and Delhi-Mumbai routes are on the cards. Increased train speed up to 160-200 km per hour are also estimated. Such announcements are worth an estimated Rs. 21,000 crore extra. Besides these, the new Rs. 1.19 lakh crores needed to set up the special safety fund is also on the cards.

In order to be profitable again, the railways must generate Rs. 5000 crore from internal revenues. Whether this will be managed via the imposition of cesses are yet to be seen. Despite introducing the new concept of Flexi-fare, the passenger revenues has witnessed a drop of 9 percent. The finances of the railways are indeed in dire straits, and we will see how well the Union Budget 2017 handles such downturns. Already the rail stocks are on the decline before the budget as reported here. Two factors the railways are betting on is the renewed focus on infra development as well as the decision not to announce any new trains, which is generally seen as a crowd-pleasing manoeuvre.

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