Sensex in India Gain; Railways Budget $12.7 Billion

Devan Biswas
25 Feb, 2011
New York City

Mumbai stocks closed higher as railways minister presented populist budget and plans to extend 1,300 kilometers of new tracks. Minister Banerjee left passenger and freight rates unchanged in her third budget in a row. The largest annual outlay of $12.7 billion will be funded with $4.5 billion debt.

[R]5:00 PM Mumbai – Mumbai stocks closed higher as railways minister presented populist budget and proposed to extend 1,300 kilometers of new tracks. Minister Mamata Banerjee left passenger and freight rates unchanged in her third budget in a row. The $12.7 billion budget, the largest annual outlay will be funded with $4.5 billion borrowings.[/R]

Stocks in Mumbai closed higher as investors focused on the railway budget and international markets edged higher after crude oil prices declined.

The Sensex index closed up 68.50 or 0.4% to 17,700.91 and the Nifty index added 40.85 to 5,303.55.

The rupee closed at 45.65 to a dollar and gold prices for ten grams declined Rs 27 to Rs 20,957.

Railway minister Mamata Banerjee left passenger fares unchanged for the ninth year in a row and announced 56 new passenger trains and the development of several new manufacturing units in West Bengal, Maharashtra and Orissa.

The passenger fares and freight rates were not revised in the budget and Prime Minister Manmohan Singh praised the minister for keeping the need of common man in focus.

The minister faced criticism that many new projects announced are rarely completed on time and only 25% of the announced projects in the last five years are implemented.

Banerjee proposed to add new local trains in Kolkata and in Mumbai and a power plant project in Thakurali, Maharashtra.

The minister estimated passenger growth of 6.4% and freight loading of 993 million tons of freight. The budget for the fiscal year expects to spend Rs 57,630 crore or $12.7 billion.

The proposed spending will be funded with the help of nearly Rs 20,954 crore or $4 billion in borrowings.

The railway minister estimated gross traffic receipts of the railways department of Rs 106,239 crore or $23 billion and announced the plan to spend Rs 9,583 crore to extend 1,300 kilometers of new lines.

The addition of 1,300 kilometers of new lines is in sharp departure from the average of 180 kilometers of new lines in the last sixty years.

The minister also proposed to fill as many as 175,000 vacant posts and employs 1.4 million, the largest employer in India.

Stock Movers

Infrastructure stocks fell after the release of railways budget. The railway minister also confirmed that the ministry has received 85 proposals for private-public partnership.

Kalindi Rail Nirman declined 13.7% to Rs 116,45 and Titagarh Wagons dropped 13.1% to Rs 331.80.

ICICI Bank increased 3.6% to Rs 987.30 and Tata Motors increased 4.4% to Rs 1,105.10

Anil Ambani controlled stocks fell sharply on the worries that 2G license investigation may have negative implications for the group.

Reliance Communications declined 5.4% to Rs 87.55 and Reliance Infrastructure declined 4.6% to Rs 638.

MphasiS dropped 28.4% to Rs 448.40 after the software services developer reported lower than expected earnings.

Tata Steel gained 1% to Rs 608 after its UK subsidiary agreed to sell certain assets to Sahaviriya Steel Industries UK Ltd. for $469 million.