The Hindu Business Line : A move to tackle inflation

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Kolkata Feb. 26 The Government's concern over inflation, it might appear, is reflected in the Railway Budget for 2007-08. There are no proposals for hikes in fares and freights; there are in fact proposals for certain reductions.

However, there are certain fine prints in Mr Lalu Prasad's Railway Budget proposals. In 2007-08, the volume of freight traffic is projected to increase by 8.25 per cent at 785 million tonnes and the freight earnings by about 11 per cent at Rs 46,943 crore.

How this is going to be achieved in the absence of any freight hike proposal? One might wonder. The probable options are: accent on movement of more short-lead traffic, mid-term announcement of upward reclassification of goods, hike of chargeable weights regardless of loadability of commodities and reduction in the handling time of rakes accompanied by increase in penalty rates - the same options exercised by Mr Lalu Prasad in the past few months.

No fare/freight hike

In the Railway Budget for 2006-07 also, there was hardly any proposal for fare or freight hike and yet, as it is clear now, during the year the freight earnings increased by 17 per cent on a volume increase of nine per cent or so.

While presenting the budget on Monday, Mr Lalu Prasad announced downward reclassification of freights for iron ore and limestones from 170 to 160. But what he did not say is that already priority allotment of rakes for transportation of these minerals attracts higher classification and, therefore, higher freight rates. Since most indentors insist on priority allotment, the de facto freight charges for these minerals are more.

The proposal to increase the ratio of tare to payload to 1:3 for future wagons will necessitate use of lighter metals for the manufacture of these wagons. This may probably limit the option to increase the chargeable weights beyond the prescribed carrying capacity. Currently, the chargeable weight exceeds the prescribed payload by eight tonnes.

Wagon designs

The decision to allow wagon manufacturers to procure their own wagon designs, within the parameters laid down by RDSO in respect of gauge, dimension and safety, will open the floodgates, paving the way for many new collaboration agreements between the local wagon manufacturers and foreign firms. While this is welcome, the absence of uniform designs might throw up wagon maintenance problems.

The container traffic, according to the Budget, is targeted to reach the 100 million-tonne level by 2011-12 from the present around 20 mt or an increase of 16 mt every year for next five years and this should be possible with the participation of private players. But then transportation in containers is not cheap.

The Railway Minister projects 20-30 per cent increase in passenger traffic against 14 per cent so far in the current fiscal. Interestingly, such a big jump in passenger traffic is envisaged on less than 10 per cent increase in the number of passenger trains. This presumably explains why the number of berths in sleeper coaches is proposed to be increased from the present 72 to 84. But such an increase in the number of berths will only reduce the passenger comfort unless the size of the coach is enlarged. But then the enlargement of the coach size might interfere with platform length. Alternatively, the toilet size in the coach might further shrink.

There is no fare hike proposal in the Railway Budget for 2007-08; on the contrary, there are proposals for certain reduction. In 2006-07 Railway Budget also, the Minister refrained from announcing fare hikes only to achieve the same through the backdoor during the middle of the year.

The Railways converted a large number of ordinary mail/express trains into the superfast category and started charging higher fares. One shouldn't be surprised if similar such exercises are undertaken during the course of the next fiscal.

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