Stocks of railway-dependent companies down

Railway budget 2011 was presented in Parliament today. As expected, Union Railway Minister Mamata Banerjee, while presenting her third Rail budget in a row, barely attended to the mounting deficit of the transportation institution and instead yielded to gimmicks that befits a politician eyeing the polls in this case the West Bengal Assembly.

While announcing her Railway Budget, Ms Banerjee said she was optimistic that financial health of the Railways will be revived by FY12. "We will see Rs 5,260 crore savings in FY12,". Where, on one hand, Banerjee left passenger fares untouched and reduced AC booking charges from Rs 20 ro Rs 10. She also announced 85 proposals for PPP and okayed launch of nine new Duranto and three Shatabdi trains. For Mumbai, she proposed  raising capacity to 107 local trains.  (See: Highlights)

The budget comes at a time when the railways are facing financial crunch with its operating ratio inching close to the 100-level mark. The Railway administration, which is coping with gloomy numbers has to deal with task of delivering what Laloo Prasad Yadav promised in his stint as the Railway Minister.

Despite populist meaures, Railway budget 2011 was a sheer disappointment for the markets. All railway stocks have reacted to the miserable announcement. Despite announcement of steps on anti-collision, Kernex Microsystems has failed to pick up.  SK Nevatia, CMD, Hind Rectifiers told CNBC-TV18 that Ms Banerjee's propositions are impractible. With so much deficit to manage, her propositions are totally not workable.

Amongst the other populist measures announced by Mamata Banejee include a target of adding 700 km of annual rail line as compared to the current 150 km, to set up new coach factory at Kolar via PPP or JV and to set up additinal wagon units in Kerala via JV.