The Railway Budget 2010-11 did well in announcement of Vision 2020. Setting up an aggressive target of adding 1,000 km lines next year and 25,000 kms in next 10 years (over five-fold increase from the 58-year average), is a step in the right direction. Even if one assumes a 40-50% delivery, it still means huge opportunities for companies in this space and transformation for Indian Railways. The other significant move was the plan to involve the private sector through the PPP route in multiple areas. If procedural and administrative issues are resolved by the new task force, new players with deep pockets can be expected to enter this segment in the medium term.

The Budget focused on populist measures and kept passenger rates unchanged. Freight rates too, remained largely untouched and were lowered for a couple of essential commodities. Railway budgets rarely dish out negative surprises and even though performance of Indian Railways marginally managed to beat conservative budget estimates set last year, much repair work is left, especially given the financial constraints faced. Important details were skipped from key announcements on new corridors as well; possibly the reason some stocks fell sharply shedding recent gains.