The Hindu Business Line : Lalu's largesse

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New Delhi, Feb. 26 With inflationary pressures looming in the background, the Union Railway Minister, Mr Lalu Prasad, has refrained from announcing any passenger or freight fare hikes.

Not only are there no rate increases — whether direct or `hidden' — in his 2007-08 Rail Budget, but he has actually effected token reductions in passenger fares by up to eight per cent and freight charges on petro-products, iron ore, limestone and other minerals by 5-6 per cent.

That makes it a genuinely non-inflationary Budget, unlike the previous `no across-the-board hike' ones, where increases came by way of reclassification of commodities or conversion of mail/express trains into super-fast category.

AC fares

Mr Prasad has left fares unchanged on the existing AC 3-tier and Sleeper coaches that have 64 and 72 berths respectively.

But for passengers travelling on new-generation coaches that will have 81 (AC 3-tier) and 84 (sleeper) berths, there would be a four per cent reduction.

The discount is eight per cent for the 81-berth AC 3-tier and 102-seat AC chair cars in the lean season (January-April and July-September).

The catch, however, is that the higher capacity coaches are to be rolled out only from the next fiscal.

Since their induction would take time, it means most of the running trains will not be covered by the discounted fares.

Mr Prasad has resorted to similar cosmetic reductions of Rs 1-2 for non-AC second-class passengers.

Freight front

On the freight front, the Rail Minister has proposed a five per cent lowering of the tariff on diesel, petrol and ammonia and six per cent in the case of iron ore, limestone, dolomite and other minerals used by cement and steel manufacturers. These are again unlikely to translate into cheaper petrol or steel for consumers.

At best, they would marginally shore up the bottom-line of oil companies or restrain steel makers from announcing immediate price increases.

In other words, Mr Prasad's proposals on both passenger and goods front are more `non-inflationary' than `anti-inflationary'.

Mr Prasad, whose Budget speech was drowned in protests by the Opposition members, also used the occasion to announce 32 new trains, eight new low-cost air-conditioned trains or Garib Raths, extension of 23 trains and increase in frequency for 14 trains.

The Railways operates over 9,000 trains every day.

Overall finances

But the Rail Minister has still a cause for pride on the overall finances of the country's largest transport organisation.

During the current fiscal, the Railways' gross traffic receipts are expected to touch Rs 63,220 crore, as against the originally budgeted Rs 59,978 crore. After deducting its various operating expenses (fuel, salaries, lease charges, etc), besides pension and miscellaneous expenditure, there would be a cash surplus of Rs 20,063.11 crore, up from Rs 14,709.79 crore in 2005-06.

Projected revenues

For the coming fiscal, gross traffic receipts are projected at Rs 71,318 crore (a Rs 8,098 crore jump over the revised estimate for 2006-07).

While passenger revenues are slated to grow by Rs 2,675 crore to Rs 20,075 crore, those from freight would go up by Rs 4,644 crore to Rs 46,943 crore. As before, Mr Prasad is betting on a buoyant economy to deliver an extra 59 million tonnes (mt) loading — almost the same as the increase in total freight tonnage from 666.5 mt in 2005-06 to 726 mt this fiscal.

Cash surplus

The Railways are expected to register a cash surplus of Rs 21,578.45 crore during 2007-08. After forking out a dividend of Rs 4,572.54 crore to the Centre — against Rs 4,242.26 crore this fiscal — there would still be well over Rs 17,000 crore of internal resources to fund a proposed investment plan of Rs 31,000 crore. Other financing sources would include Rs 5,000 crore of borrowings through the Indian Railways Finance Corporation, Rs 500 crore under the Wagon Investment Scheme and 240 crore to be raised by the Rail Vikas Nigam Ltd.

The Railways' `operating ratio' — a broad efficiency indicator of amount spent for earning every rupee — is budgeted to be 79.6 per cent in 2007-08, against this year's 78.7 per cent.

This ratio had crossed 98 per cent in 2000-01. Mr Prasad claimed that the Indian Railways has now joined a "select club of Railways in the world having an operating ratio of less than 80 per cent".

Further, the balances in its various funds — Depreciation Reserve, Development, Pension, Capital and Safety — would close at a record Rs 16,170.60 crore in the coming fiscal, which more than twice the Rs 7,784.87 crore of 2004-05.

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