The Hindu Business Line : Rail Budget leaves freight rates unchanged — Laloo refrains from hiking passenger fares

"Every time there was an increase in passenger charges, traffic registered a decline. The key to more revenues is not an increase in fares, but better services that attract users."

TRAVELS ON THE SAME TRACK: The Railway Minister, Mr Laloo Prasad Yadav, entering Parliament House to present the Rail Budget on Tuesday. - Kamal Narang

New Delhi , July 6

THE Railway Minister, Mr Laloo Prasad Yadav, has refrained from increasing passenger fares or freight charges in line with the recent emphasis of the Railways to shore up revenues by boosting volumes and regaining market share lost to the roads sector.

Presenting his maiden Budget for 2004-05, Mr Yadav virtually followed the footsteps of his predecessor, Mr Nitish Kumar, who too in his 2003-04 budget did not go in for any freight or passenger fare increase.

While not tinkering with rates, Mr Yadav has, at the same time, not succumbed to the temptation of announcing new schemes with large outlays that would have put a drain on railway finances. The only exception, however, was the announcement of a feasibility study for a wheel plant at his constituency, Chhapra.

There were several announcements on upgradation of Railway services for both passenger and freight users and the expected dose of welfare measures such as handicapped-friendly stations, better amenities for women travellers and concessions for war widows.

By not touching fares or freight charges, the Railways is expecting an increase in business, which in turn, would translate into better revenue flows for the organisation. While passenger movement is expected to go up by three per cent, the freight target has been enhanced from 557 million tonnes last year to 580 million tonnes in the current year.

"In the last few years, we have noticed that every time there was an increase in passenger charges, traffic registered a decline. The key to more revenues is not an increase in fares, but better services that attract users," the Railway Board Chairman, Mr R.K. Singh, told reporters here.

In terms of earnings, the increased business is expected to translate into 3.56 per cent increase from Rs 13,460 crore (revised estimates) for 2003-04 to Rs 13,940 crore from passenger services. Freight earnings are expected to rise six per cent from Rs 27,115 crore to Rs 28,745 crore. The gross traffic receipts of the Railways are expected to climb from Rs 42,605 crore to Rs 44,902 crore.

The only change in user charges comes in the form of a 7-per cent increase in parcel rates and a rationalisation in the classification of parcel scales. The increased levy, which the Railways says was necessary to meet its operating expenses, would fetch an additional Rs 50 crore for the Railways.

The improved finances are expected to translate into a better operating ratio (the amount of money spent by the Railways to earn every Rs 100) at 92.6 per cent, which is the same as the revised figure for last year. The interim budget had predicted a worsening of the operating ratio at 93 per cent for 2004-05.

The achievement is significant as the Railways' pension liability is expected to climb from Rs 6,200 crore in 2003-04 to Rs 6,400 crore in the current year and the recent increase in diesel prices expected to leave a dent of Rs 700 crore on Railway finances.

With improved finances, the Railways would clear its entire dividend liability of Rs 3,305 crore for last year and pay another Rs 300 crore to bring down its deferred dividend liability from Rs 2,473 crore to Rs 2,173 crore.

The Railways, which pays dividend to the general exchequer at the rate of 7 per cent of the total funds invested by the Government over the years, was not able to discharge its dividend liability in 2001-02 and 2002-03 owing to poor financial health of the organisation.

The Railways has also increased the provisioning for different Railway funds such as Depreciation Reserve Fund, Development Fund and Capital Fund that serve as a kitty from which the Railways draws money for a rainy day. While the funds had fallen to near zero two years ago, the current year is expected to see the Depreciation Fund close at Rs 4,706 crore and Development Fund at Rs 856 crore.

Mr Yadav has retained the focus on safety and development and promised continued support for all existing programmes started by his predecessor, Mr Nitish Kumar.

Mr Yadav took the opportunity to highlight the various achievements under different safety schemes launched earlier and pointed out that the number of accidents in 2003-04 had fallen to 325 from 473 in 2001.

The Railways would introduce axle counters, train warning systems and anti-collision technology across the network. It would also equip passenger coaches with crashworthiness features such as anti-climbing tight-lock couplers. Railway infrastructure like tracks, bridges and signalling equipment would be modernised and ageing assets replaced where necessary, the Minister said.

Mr Yadav has also sought to address a long-felt need for trauma relief in the event of an accident by announcing an Institute of Rescue and Medical Relief that would come up at Bangalore.

The Minister announced 15 new trains in addition to starting the 17 `Sampark Kranti' series trains announced by Mr Kumar in his interim budget. A new class of trains for the rural population, called `Village on Rails' would also be explored to increase services to places of pilgrim or historical interest, he said.

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