Feb 26, 2016: Perspective view of Railway Budget 2016

Feb 26, 2016: Perspective view of Railway Budget 2016

General Studies: Daily Capsule

Curtain Raiser –News Update (Feb 26, 2016)

Objective of Rail Budget 2016: Transforming Indian Railways into a first-rate service provider while growing into a customer friendly organization

Strategy:

•         New Revenues (monetizing all possible sources of Revenue)
•               New norms (incorporating best international practices including ‘zero-based budgeting approach’)
•              New structures (revisiting all process and organizational structure)

(Source: Rail Budget 2016: Some reformist moves, but worrying math, Live Mint)

•             New Revenues (monetizing all possible sources of Revenue): The Minister plans to step up efforts to monetize various assets, including land, boost non-fare revenue, use the private –public-partnership model more extensively, and work jointly with State governments to both formulate and fund regions-or-city specific projects 

•        New norms (incorporating best international practices including ‘zero-based budgeting approach’):
• 
  “Zero-based budgeting (ZBB) is a method of budgeting in which all expenses must be justified for each new period. Zero-based budgeting starts from a "zero base" and every function within an organization is analyzed for its needs and costs.Budgets are then built around what is needed for the upcoming period, regardless of whether the budget is higher or lower than the previous one.

( http://www.investopedia.com/terms/z/zbb.asp#ixzz41HfqsCAp)”

       “See, first obviously what we did was we started a zero budgeting exercise. So, we told general managers of all divisions to go through each and every cost…..

         Why not go through all the components of that cost? As a result of that we started from the grassroots because zero budgeting cannot happen at the board level. We started it from the grassroots and that has resulted into one big component of saving.”

http://www.livemint.com/Politics/FsjyLE5vmiyTpwiZKlt82N/Weve-created-a-new-atmosphere-of-accountability-Suresh-Pra.html

(From Railway Minister's Interview to DD News)

•            New structures (revisiting all process and organizational structure): The Railway Board is to be reorganized along business lines with cross-functional teams focused on areas such as non-fare revenues, speed enhancement and information technology

Mission:

1. Mission 25 Tonne

2. Mission Zero-accident

3. Mission PACE (Procurement and Consumption Efficiency)

4. Mission Raftaar

5. Mission Hundred

6. Mission beyond Book-keeping

7. Mission Capacity Utilization 

(Transformation of Indian Railways through Avataran - seven Mission mode activities )

Passenger traffic estimate shortfall: 50 crore shortfall (estimated 860 crore passengers for 2015-16 but expected to carry 810 crore passengers)

Capital outlay of Rs. 1.21 lakh crore for 2016-17, a jump of 21 per cent over this year

4.        

Operating ratio target (ratio of working expenses to gross earnings): 92% (realistic in view of implementation of 7^th Pay Commission recommendation as compared to unachieved 88.5% target)

Gross traffic receipts fell by 8.6% from the budgeted estimates.

Freight earnings—the breadwinner of Indian Railways—declined by almost 8% “on account of low demand from the core sector”. 

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Source: Rail Budget 2016: Some reformist moves, but worrying math, Live Mint
http://www.livemint.com/Opinion/eDE3tE6MdBsXt5Q8rrcLfN/Some-reformist-moves-but-worrying-math.html 

&

Marshalling resources to stay on track, Feb 26, 2016, The Hindu