Monday, May 18, 2015
100 Smart Cities and 500 Rejuvenated Cities (AMRUT)
Appearing at http://www.financialexpress.com/article/fe-columnist/building-100-smart-cities-smart-execution-holds-the-key/71890/
The cabinet approval for central
funding of USD 16 billion for the 100 Smart Cities and the 500 Rejuvenated
Cities will change the way we live and work, the way we do business and the way
we are perceived by the rest of the world. More importantly, it will give an
explosive push to the growth of the economy, in a scale that will dwarf the
growth provided by the Golden Quadrilateral project.
To get an idea of the magnitude
of the impact, it is important to understand the complete initiative would
probably cost over USD 5 trillion in today’s costs, and will be spread over
atleast twenty years if not more. So what would USD 16 billion provide against
the overall requirement of USD 5 trillion ? This initial funding of USD 16
billion is like a seed money to bootstrap the process of urban rejuvenation and
building of 100 Smart cities. As each city gets built up and as cities get
rejuvenated, it has a amplifying effect on the economy as the economy starts to
become more and more efficient, allowing faster growth which in turn would
allow larger investments into cities. Hence, the initial USD 16 billion and
whatever else the central government earmarks for this initiative in subsequent
years, will play the role of catalyzing private sector to step in invest in a
series of initiatives in cities, which would fall under the category of
Public-Private Partnershup.
However, why is this interesting
from a living perspective ? These cities will transform the way we live, work
and also think. Since the cities will be smart, they would consume less energy,
be cleaner, have cleaner air, be more safe and secure and be resilient to
disasters – natural and manmade. What this means is that the cities will draw
its energy from in situ sources such as solar. Water will be mostly
recirculated with near zero wastage. Sewage will be mostly treated locally.
Transportation will be far better managed through technology and will have near
zero pollution. With clean air, clean water and an minimally polluted
environment, health and quality of life will improve very significantly, making
Indian cities as the most preferred cities in the world to live in.
This is only a very small snapshot
of what smart cities will do in the short run. What it will do to us in the
long run is change the way we think. It would push us to be more innovative,
making us think in a manner that we have not been able to do so earlier due to
the cacophony of systems and processes that run our cities as of now. The
standardization of city systems would lead to exponential increase in adoption
of innovations within the city system which in turn would lead to creation of
new kinds of industries which hitherto do not exist. And just as in most
leading economies, innovation will contribute to a lion’s share of the GDP.
Beyond the impact that the
cabinet decision will have on India and Indian economy, it is important to note
that it would also have a very significant impact on the global economy. The
expected total of USD 5 trillion spend is equal to about 7% of the total
current global economy. As India starts spending on the cities, it would start
consuming goods and services from the global market, this providing the
desperately needed global growth engine. Thus, this cabinet decision will have
a much far reaching impact than just contributing to India’s growth.
This initiative, when juxtaposed
with the initiative of Housing for All by 2022 and the Make in India program,
will have highly amplified impact on India, Indian industry and Indians per se.
The Housing for All will hopefully provide the framework and funds that will
lead to most families in India having their own homes. And many of these homes
will not be ordinary home but will be smart homes that will be able to talk and
interact with the larger city, unleashing new high technology industries in
India and making it Easier to Live in India.
However, the execution of the
Smart Cities and City Rejuvenation plans also need to be appropriate to get a
greater return on investments than what previous attempts had brought in. As of
now, the Government is planning to have a “City Competition” wherein cities
will hire consultants to present what their plans are and why they should be
selected in the first lot of 16 cities to be shortlisted for being funded by
the Government. If that is actually the case, then cities with more capacity,
which needless to say are mostly in the south and the west, would end up having
the bulk of the funding for becoming a Smart City. However, this would deprive
the ordinary citizens of an equitable opportunity to have their city upgraded.
Also, it would not allow equitable distribution of the funds to cities across
the country.
If on the other hand, the
government will actually use their discretion and equitably distribute the
funding across the country, based on considerations of population and other
social-economic criteria, then perhaps the mechanism of “City Competition” is a
misnomer and should probably be called a “City Readiness & Planning”
exercise.
“City Competition” is usually
used in a developed country wherein the cities are all inherently highly
developed and livable and the “City Competition” is brought in to discover even
potential best practices that would make the cities even better. However, in
India, the cities do not have the basic level of facilities that are expected
from a city from a globally competitive economy.
We are at the threshold of an
exciting new India. It is important that the execution is flawless. The
mechanism of using “City Competition” as a basis for providing the funding to
the cities, needs to be executed in a manner that is non-discriminatory to
those cities who are already laggards and have much lesser capability to scale
up to be able to be considered under the City Competition mechanism. It is
important for India and the global economy that this initiative is a resounding
success.
Are we prepared for mass-scale job destruction
Plan a future where manufacturing & services are highly automated
Jobs are generated from the primary sector, secondary sector and tertiary sector industries. Primary sector jobs consist mainly of agriculture and a bit of mining in India. Core agriculture sector has already seen significant reduction in jobs. That leaves manufacturing and service as the expected growth engines for job creation. Manufacturing forms the secondary industry and services largely consists of tertiary industry.
India’s services sector holds enormous significance for the Indian economy; dynamic and endowed with a distinct universe of its own. India has grown rapidly in the last decade with almost 72.4 per cent of the growth contribution in India’s GDP in 2014-15, coming solely from its service sector. It has emerged to contribute majorly to national and states’ incomes, job creation and contribution to the economy. This is unlike other developing economies where manufacturing plays a key role in job creation.
A critical debate has now emerged on whether India can become the world’s third largest economy and if that can be achieved by revamping India’s manufacturing. The underlying assumption is that manufacturing can generate significant jobs and that it is strategic for the economy. As the latter is a policy decision, one has to be careful about the first assumption that manufacturing can lead to job creation.
Given the march of technology, manufacturing is expected to get even more automated with technologies such as 3D printing not only replacing traditional manufacturing, but also handicraft craftsmen whose work could not be replicated by earlier technologies. We may soon see a tipping point where suddenly in a span of a few years, vast amount of manufacturing industries may switch to low cost 3D printers, leaving millions jobless in a short period of time.
Low-end services jobs, including the BPO industry, are already getting highly automated with software replacing humans. The lower end services industry is at the cusp of transformation with technologies such as driverless cars, ATMs, automatic payment systems replacing service jobs in driving, ticketing and banking. For the longer run, we need to immediately create frameworks of training our workforce to perform very high end service jobs, else we could soon see massive job losses, followed by a collapse in demand and eventual collapse in economy.
Revisiting the government’s current intent on structurally transforming the manufacturing sector through its flagship initiative Make in India, we must note that manufacturing as a sector offers one of the most complex interplays of labour and capital. Thus, many argue that Make in India is easier said than done. India has almost everything that China had to provide a boost to its manufacturing in terms of sound fundamentals and a massive pool of labour. To top it, it has a very large English-speaking population. So, what is stopping investments into manufacturing from pouring in?
Among other reasons, India’s poor ranking in ease of doing business has discouraged global investors. Acquiring land for a largescale manufacturing facilities teamed with stringent labour reforms are viewed as major roadblocks. Weak infrastructure deters India from replicating the low cost high-volume manufacturing that China excels in. Given the impediments, while it might take time for manufacturing to lift off, services sector’s establishment cannot be overlooked. India’s services sector currently accounts for about 65 per cent of India’s GDP and the point that it is the world’s second-fastest growing services-sector cannot be ignored. In fact, it presents an opportunity to be leveraged upon.
Research points to positive and significant sectoral-linkages between manufacturing and services. India’s policymakers too seem to have realised that the two need to go together especially in case of a large diversified economy like ours. In fact, Make in India cannot succeed without robust manufacturing activities accompanied by a healthy service sector. For instance, growth of communication services might provide the market with demand and supply insights for manufacturing to regulate production and industrial inputs in the form of buseswhich can be imperative to a service sub-sector like, transport services.
Both sectors warrant rapid skill upgradation because sustaining the dynamism of skill-intensive sectors requires a continuous supply of skills. The prime minister’s Skill India objective needs to be accorded with high priority in order to gain momentum in high-tech manufacturing. Currently, less than 40 per cent of around 1 million people added to India’s workforce every month meet the industry’s skill requirements. There is an urgent need to tackle employability rather than just unemployment.
A number of productive initiatives are already in place. A National Skill Development Mission has been launched to create the strategiesthat could help implement decisions of the PM’s Council and the National Skill Development Corporation (NSDC). NSDC is expected to provide skill training that is required by organised and unorganised sectors.
Make in India can be as much about services as it is about manufacturing. India’s service sector remained resilient even during the global financial crisis. Moreover, services are now part of WTO and FTA negotiations. Reforms that could make Indian services more competitive globally include ushering in the concept of Total Factor Productivity to enable high quality of services, in line with global parameters. We need to improve the TFP of services particularly in relationship to other countries’ TFP that could be a real acid test for India’s service sector.
China’s loss of an estimated 6 million from the job market due to an ageing population presents to India an incredible opportunity which should be capitalised to the fullest? All three arms of the Indian economy: agriculture, manufacturing and services being interlinked need to support each other for this. We need more unifying measures like the GST encompassing all three and creating a holistic environment of a single market for the government and for industry.
In conclusion, a new India is in the making in which services along with manufacturing are expected to play a pivotal role in translating the advantage of democracy, demography and demand into real growth and empowerment, through employment. In answer to the economic survey 2014-15’s statement – What to make in India? Manufacturing or services it is not so much a question of ‘or’ as it is a matter of ‘and.’ In addition, we must immediately start planning for a future where manufacturing and services can be highly automated, this suits well for China and the western economies as they are expected to have a reduced workforce due to their demographic structure while India could be saddled with a large workforce waiting to pick up the reins.
India’s services sector holds enormous significance for the Indian economy; dynamic and endowed with a distinct universe of its own. India has grown rapidly in the last decade with almost 72.4 per cent of the growth contribution in India’s GDP in 2014-15, coming solely from its service sector. It has emerged to contribute majorly to national and states’ incomes, job creation and contribution to the economy. This is unlike other developing economies where manufacturing plays a key role in job creation.
A critical debate has now emerged on whether India can become the world’s third largest economy and if that can be achieved by revamping India’s manufacturing. The underlying assumption is that manufacturing can generate significant jobs and that it is strategic for the economy. As the latter is a policy decision, one has to be careful about the first assumption that manufacturing can lead to job creation.
Given the march of technology, manufacturing is expected to get even more automated with technologies such as 3D printing not only replacing traditional manufacturing, but also handicraft craftsmen whose work could not be replicated by earlier technologies. We may soon see a tipping point where suddenly in a span of a few years, vast amount of manufacturing industries may switch to low cost 3D printers, leaving millions jobless in a short period of time.
Low-end services jobs, including the BPO industry, are already getting highly automated with software replacing humans. The lower end services industry is at the cusp of transformation with technologies such as driverless cars, ATMs, automatic payment systems replacing service jobs in driving, ticketing and banking. For the longer run, we need to immediately create frameworks of training our workforce to perform very high end service jobs, else we could soon see massive job losses, followed by a collapse in demand and eventual collapse in economy.
Revisiting the government’s current intent on structurally transforming the manufacturing sector through its flagship initiative Make in India, we must note that manufacturing as a sector offers one of the most complex interplays of labour and capital. Thus, many argue that Make in India is easier said than done. India has almost everything that China had to provide a boost to its manufacturing in terms of sound fundamentals and a massive pool of labour. To top it, it has a very large English-speaking population. So, what is stopping investments into manufacturing from pouring in?
Among other reasons, India’s poor ranking in ease of doing business has discouraged global investors. Acquiring land for a largescale manufacturing facilities teamed with stringent labour reforms are viewed as major roadblocks. Weak infrastructure deters India from replicating the low cost high-volume manufacturing that China excels in. Given the impediments, while it might take time for manufacturing to lift off, services sector’s establishment cannot be overlooked. India’s services sector currently accounts for about 65 per cent of India’s GDP and the point that it is the world’s second-fastest growing services-sector cannot be ignored. In fact, it presents an opportunity to be leveraged upon.
Research points to positive and significant sectoral-linkages between manufacturing and services. India’s policymakers too seem to have realised that the two need to go together especially in case of a large diversified economy like ours. In fact, Make in India cannot succeed without robust manufacturing activities accompanied by a healthy service sector. For instance, growth of communication services might provide the market with demand and supply insights for manufacturing to regulate production and industrial inputs in the form of buseswhich can be imperative to a service sub-sector like, transport services.
Both sectors warrant rapid skill upgradation because sustaining the dynamism of skill-intensive sectors requires a continuous supply of skills. The prime minister’s Skill India objective needs to be accorded with high priority in order to gain momentum in high-tech manufacturing. Currently, less than 40 per cent of around 1 million people added to India’s workforce every month meet the industry’s skill requirements. There is an urgent need to tackle employability rather than just unemployment.
A number of productive initiatives are already in place. A National Skill Development Mission has been launched to create the strategiesthat could help implement decisions of the PM’s Council and the National Skill Development Corporation (NSDC). NSDC is expected to provide skill training that is required by organised and unorganised sectors.
Make in India can be as much about services as it is about manufacturing. India’s service sector remained resilient even during the global financial crisis. Moreover, services are now part of WTO and FTA negotiations. Reforms that could make Indian services more competitive globally include ushering in the concept of Total Factor Productivity to enable high quality of services, in line with global parameters. We need to improve the TFP of services particularly in relationship to other countries’ TFP that could be a real acid test for India’s service sector.
China’s loss of an estimated 6 million from the job market due to an ageing population presents to India an incredible opportunity which should be capitalised to the fullest? All three arms of the Indian economy: agriculture, manufacturing and services being interlinked need to support each other for this. We need more unifying measures like the GST encompassing all three and creating a holistic environment of a single market for the government and for industry.
In conclusion, a new India is in the making in which services along with manufacturing are expected to play a pivotal role in translating the advantage of democracy, demography and demand into real growth and empowerment, through employment. In answer to the economic survey 2014-15’s statement – What to make in India? Manufacturing or services it is not so much a question of ‘or’ as it is a matter of ‘and.’ In addition, we must immediately start planning for a future where manufacturing and services can be highly automated, this suits well for China and the western economies as they are expected to have a reduced workforce due to their demographic structure while India could be saddled with a large workforce waiting to pick up the reins.
Saturday, March 7, 2015
Friday, February 27, 2015
Views on Rail Budget in Economic Times, Times of India, Indian Express and other newspapers
http://computer.financialexpress.com/news/overall-a-very-well-balanced-rail-budget-jaijit-bhattacharya/9686/
http://www.firstpost.com/budget/railway-budget/rail-budget-2015-is-nicely-balanced-but-where-are-the-funds-going-to-come-from-2124769.html
http://www.businessworld.in/news/business/infrastructure/railways-to-see-137-bn-investment-in-5-years/1752531/page-1.html
Jaijit Bhattacharya, Partner, Infrastructure and Government Services, KPMG India, said: The Rail budget has all the right articulations. We welcome the greater role of private sector in station operation, railway electrification and other activities. The aim to have an Operating Ratio of 88.8% is also very welcome and forward looking. However, one would like to see the details of how Railways will be able to manage this target. Also, while it has been mentioned that there will be no hike in railway passenger fares, it appears that the fare reduction due to Fuel Adjustment Component will not be applied.
http://economictimes.indiatimes.com/industry/transportation/railways/rail-budget-2015-suresh-prabhu-proposes-an-annual-investment-plan-of-rs-1-lakh-crore/articleshow/46380149.cms
Even if the project is structured appropriately, the last decade of experience of PPP in this country has not been smooth. Ground realities need to be taken into account. It would take a few investment cycles to bring back trust in PPP in the country
http://www.firstpost.com/business/rail-budget-2015-7-stats-that-show-by-how-prabhu-plans-to-beat-his-predecessors-2123361.html
"Excellent initiatives in Ease of Doing Business with Railways in the Rail budget. If the initiatives are implemented, it will improve on the private sector trust and hence help in attracting private sector participation in railways," said Jaijit Bhattacharya, partner, infrastructure and government services at KPMG in India, adding it is on overall well-balanced budget.
From a vision and articulation point of view, it was very much a high-technology budget. These are not just incremental changes, there was a wow factor for sure,” said Jaijit Bhattacharya, partner, government advisory, KPMG.
He added that not just ICT technology had been talked about but also high-end technology, be it vacuum toilets or semi-high-speed rail. “It is all in the right direction, though the bigger concern is the implementation part of it,” Bhattacharya said.
Rail Budget 2015 is nicely balanced, but where are the funds going to come from?
Feb 27, 2015 09:55 IST
By Jaijit Bhattacharya
The budget articulates the vision of transforming the Indian railways in a systematic process over a longer period of time rather than having a big bang approach. It is a balanced budget. However, it leaves question mark on the challenge of convincingly garnering the significant amount of funds required for this audacious transformation.
The budget laid out four goals of
a) To deliver a sustained and measurable improvement in customer experience
b) To make Rail a safer means of travel
c) To expand Bhartiya Rail’s capacity substantially and to modernize infrastructure
d) To make Indian Rail financially self-sustainable.
The budget laid out a goal to increase the Indian railways network to 1.38 lakh kilometers and freight traffic from 1 billion tonnes to 1.5 billion tonnes.
The budget adopts an execution strategy based on five drivers
- Adopting a medium-term perspective
- Building Partnerships with states, PSUs, multilateral agencies and private sector for ensuring financing and last mile connectivity
- Leveraging additional resources;
- Revamping management practices, systems, processes, and re-tooling of human resources
- Setting standards for Governance and Transparency.
The budget laid emphasis on gauge conversion over next 5 years and a focus on running fast trains like Rajdhani, Shatabdi by decongesting existing high density routes. It also laid out a goal of increasing track length by 20 percent to 138,000 km in next 5 years. This initiative would also provide significant opportunities to the private sector, if it is actually achieved.
The budget also articulated the objective of substantially regaining freight market share. However, in light of the increase in freight rates, and competition from truckers, it is not clear how Railways actually plans to increase its freight market share.
Although the budget announced no hike in passenger fares, there is an implicit hike as the Fuel Adjustment Component (FAC) that was due to be applied in December 2014, is not being applied.
FAC was designed to pass on the fuel hike or fuel price reduction to the passengers. With the fuel price falling by over 20 percent, the fares should have been reduced. However, there is no mention of the FAC being applied in the near future.
Promise of hygiene
The budget take forward the national flagship program of Swachh Bharat with a focus on hygiene. It promises to adopt vacuum toilets (which exist in aircrafts) in 17,000 places. The Railways plans to build new toilets covering 650 additional stations compared to 120 stations last year. Indian railways will fit Bio-toilets in coaches and is in the process of replacing the existing toilets with 17,388 bio toilets.
The quality of Indian Railways’ On-board Housekeeping Service (OBHS), presently available in 500 pairs of trains, is being re-looked to make it more effective. Indian railways will take steps immediately to address customer concerns.
The budget also brings in focus on the other national program of ‘Make in India’. The local manufacturing will focus on High Horse Power and green technology locomotives, commodity specific wagons like auto carriers, signaling systems and train protection systems and track laying and track maintenance machines.
Focus on safety is a key feature of this budget. It laid out a goal of eliminating all unmanned level crossings by construction of Road over Bridges (ROBs) and Road under Bridges (RUBs). In the short term, RDSO has been asked to develop a suitable device with reliable power supply system based on theft-proof panels/batteries in consultation with Indian Space Research Organization, using geo-spatial technology for providing audio-visual warning to road users at unmanned level crossings.
Further, a radio based signal design project has been taken up with IIT Kanpur for warnings at unmanned level crossing. As part of the budget vision, many other technologies and programmes will be adopted for enhancing railway safety.
Emphasis on technology
This budget also emphasized very significant uptake of technology in every area, and not being limited to only information technology. It lays out a desire to adopt high technology in the areas ranging from toilet and signalling to safety and ticket bookings as well as food ordering. It also lays emphasis on technology creation where it does not exist.
The budget provides for the Indian Railways to be socially sensitive, with railway infrastructure support for the visually challenged, senior citizens, women and defence personnel. It also provides for the role of Indian railways in skill development and employment generation through self-employment.
From a more fundamental structural reforms perspective, the budget laid out a goal of Indian railway to target an operating ratio of 88.5 percent, in the background of the central government providing limited budgetary support. Such a goal would free up some revenues for investing on capital projects and the safety enhancement as laid out in the budget.
Although the budget speech mentioned that pension funds, multi-lateral funds, JV’s with state government and PSU’s and PPP would be the means of garnering the funds required to meet the staggering capital requirement of Rs 8.5 trillion rupees in the next five years, it is hard to envisage pension funds bringing in this capital in the short to medium term. The other bodies such as state government, PSU’s and multi-lateral bodies will find it difficult to provide for this quantum of funds.
Overall the budget is visionary and lays out a longer terms vision for the Indian Railways and should be seen in conjunction with the proposed Vision 2030 document that is proposed to be released in the latter part of this year. Such an approach would provide the much needed continuity in restructuring, strengthening and modernizing this very important piece of infrastructure which is crucial for an efficient functioning and growth of the economy. It would be in the interest of the nation that this vision succeeds and that the necessary funding is managed.
(The author is Partner, Infrastructure and Government Services at KPMG in India)
The budget articulates the vision of transforming the Indian railways in a systematic process over a longer period of time rather than having a big bang approach. It is a balanced budget. However, it leaves question mark on the challenge of convincingly garnering the significant amount of funds required for this audacious transformation.
Representational image. PTI
a) To deliver a sustained and measurable improvement in customer experience
b) To make Rail a safer means of travel
c) To expand Bhartiya Rail’s capacity substantially and to modernize infrastructure
d) To make Indian Rail financially self-sustainable.
The budget laid out a goal to increase the Indian railways network to 1.38 lakh kilometers and freight traffic from 1 billion tonnes to 1.5 billion tonnes.
The budget adopts an execution strategy based on five drivers
- Adopting a medium-term perspective
- Building Partnerships with states, PSUs, multilateral agencies and private sector for ensuring financing and last mile connectivity
- Leveraging additional resources;
- Revamping management practices, systems, processes, and re-tooling of human resources
- Setting standards for Governance and Transparency.
The budget laid emphasis on gauge conversion over next 5 years and a focus on running fast trains like Rajdhani, Shatabdi by decongesting existing high density routes. It also laid out a goal of increasing track length by 20 percent to 138,000 km in next 5 years. This initiative would also provide significant opportunities to the private sector, if it is actually achieved.
The budget also articulated the objective of substantially regaining freight market share. However, in light of the increase in freight rates, and competition from truckers, it is not clear how Railways actually plans to increase its freight market share.
Although the budget announced no hike in passenger fares, there is an implicit hike as the Fuel Adjustment Component (FAC) that was due to be applied in December 2014, is not being applied.
FAC was designed to pass on the fuel hike or fuel price reduction to the passengers. With the fuel price falling by over 20 percent, the fares should have been reduced. However, there is no mention of the FAC being applied in the near future.
Promise of hygiene
The budget take forward the national flagship program of Swachh Bharat with a focus on hygiene. It promises to adopt vacuum toilets (which exist in aircrafts) in 17,000 places. The Railways plans to build new toilets covering 650 additional stations compared to 120 stations last year. Indian railways will fit Bio-toilets in coaches and is in the process of replacing the existing toilets with 17,388 bio toilets.
The quality of Indian Railways’ On-board Housekeeping Service (OBHS), presently available in 500 pairs of trains, is being re-looked to make it more effective. Indian railways will take steps immediately to address customer concerns.
The budget also brings in focus on the other national program of ‘Make in India’. The local manufacturing will focus on High Horse Power and green technology locomotives, commodity specific wagons like auto carriers, signaling systems and train protection systems and track laying and track maintenance machines.
Focus on safety is a key feature of this budget. It laid out a goal of eliminating all unmanned level crossings by construction of Road over Bridges (ROBs) and Road under Bridges (RUBs). In the short term, RDSO has been asked to develop a suitable device with reliable power supply system based on theft-proof panels/batteries in consultation with Indian Space Research Organization, using geo-spatial technology for providing audio-visual warning to road users at unmanned level crossings.
Further, a radio based signal design project has been taken up with IIT Kanpur for warnings at unmanned level crossing. As part of the budget vision, many other technologies and programmes will be adopted for enhancing railway safety.
Emphasis on technology
This budget also emphasized very significant uptake of technology in every area, and not being limited to only information technology. It lays out a desire to adopt high technology in the areas ranging from toilet and signalling to safety and ticket bookings as well as food ordering. It also lays emphasis on technology creation where it does not exist.
The budget provides for the Indian Railways to be socially sensitive, with railway infrastructure support for the visually challenged, senior citizens, women and defence personnel. It also provides for the role of Indian railways in skill development and employment generation through self-employment.
From a more fundamental structural reforms perspective, the budget laid out a goal of Indian railway to target an operating ratio of 88.5 percent, in the background of the central government providing limited budgetary support. Such a goal would free up some revenues for investing on capital projects and the safety enhancement as laid out in the budget.
Although the budget speech mentioned that pension funds, multi-lateral funds, JV’s with state government and PSU’s and PPP would be the means of garnering the funds required to meet the staggering capital requirement of Rs 8.5 trillion rupees in the next five years, it is hard to envisage pension funds bringing in this capital in the short to medium term. The other bodies such as state government, PSU’s and multi-lateral bodies will find it difficult to provide for this quantum of funds.
Overall the budget is visionary and lays out a longer terms vision for the Indian Railways and should be seen in conjunction with the proposed Vision 2030 document that is proposed to be released in the latter part of this year. Such an approach would provide the much needed continuity in restructuring, strengthening and modernizing this very important piece of infrastructure which is crucial for an efficient functioning and growth of the economy. It would be in the interest of the nation that this vision succeeds and that the necessary funding is managed.
(The author is Partner, Infrastructure and Government Services at KPMG in India)
My views on the Rail Budget
http://computer.financialexpress.com/?p=9686
Jaijit Bhattacharya, Partner, infrastructure and Government Services, KPMG, hailed the maiden Rail Budget presented by Railway Minister Suresh Prabhu today.
“The Rail budget has all the right articulations. We welcome the greater role of private sector in station operation, railway electrification and other activities. The aim to have an Operating Ratio of 88.8% is also very welcome and forward looking. However, one would like to see the details of how Railways will be able to manage this target. Also, while it has been mentioned that there will be no hike in railway passenger fares, it appears that the fare reduction due to Fuel Adjustment Component will not be applied,” said Bhattacharya
“Other passenger enhancement focussed initiatives, safety and modernization of railways, including introduction of high speed railways is welcome. Excellent initiatives in Ease of Doing Business with Railways in the Rail budget. If the initiatives are implemented, it will improve on the private sector trust and hence help in attracting private sector participation in railways,” he added
Overall a very well balanced Rail budget: Jaijit Bhattacharya
“The Rail budget has all the right articulations. We welcome the greater role of private sector in station operation, railway electrification and other activities. The aim to have an Operating Ratio of 88.8% is also very welcome and forward looking. However, one would like to see the details of how Railways will be able to manage this target. Also, while it has been mentioned that there will be no hike in railway passenger fares, it appears that the fare reduction due to Fuel Adjustment Component will not be applied,” said Bhattacharya
“Other passenger enhancement focussed initiatives, safety and modernization of railways, including introduction of high speed railways is welcome. Excellent initiatives in Ease of Doing Business with Railways in the Rail budget. If the initiatives are implemented, it will improve on the private sector trust and hence help in attracting private sector participation in railways,” he added
Thursday, February 26, 2015
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