Rail commuters and freight users have predictably been spared rate hikes in the Railways Minister, Ms Mamata Banerjee's latest Railway Budget, which comes just a couple of months before Assembly elections in her home State of West Bengal.

The Railway Minister's status quo on the tariff front found explicit support from the Prime Minister, Dr Manmohan Singh, who, in the past, had voiced concern over the Indian Railways' (IR) deteriorating finances. But on Friday, Dr Singh credited Ms Banerjee with presenting a “common man's Budget”, which will help “weaken the cost-push element of inflation”.

The Railway Minister, on her part, claimed that the IR's “tough times are now over”, as the pressures from discharging one-time Sixth Pay Commission arrears have receded and buoyancy from revenues have returned.

Passenger sops

Ms Banerjee used the opportunity to announce a slew of sops for passengers. E-ticket booking charges have now been halved to Rs 5 for non-AC and Rs 10 for AC travel. Also, 58-year-old women can avail themselves of senior citizen benefits, as against the current eligibility age of 60. Men above 60 years would be entitled to a 40 per cent fare concession, as opposed to 30 per cent earlier.

The Rail Budget also has offerings for industry. Wagon manufacturers such as Texmaco and Titagarh Wagons will benefit from Ms Banerjee's decision to procure 18,000 wagons in 2011-12, on top of the record 16,500 being purchased this fiscal (as against 13,068 and 8,295 in the preceding two years).

Similarly, steel makers can take solace from the IR's new focus on building 1,300 km of new rail lines – up from the 700 km in 2010-11 and just 357 km in the earlier year. The Rail Budget plans to almost double its outlay on construction of new lines from Rs 4,990.85 crore to a budgeted Rs 8,433.62 crore in the coming fiscal.

IRFC bonds

For investors, too, the IR proposes to float Rs 10,000 crore of tax-free bonds from the Indian Railway Finance Corporation (IRFC) in this coming fiscal. IRFC is budgeted to raise an unprecedented Rs 20,594.38 crore (compared with Rs 8,975.46 crore in 2010-11). This will fund a large chunk of the IR's Plan size of Rs 57,630 crore for 2011-12, against Rs 40,314.93 crore this fiscal. IRFC may have to even float an IPO to raise the additional equity to meet the stipulated debt-equity ratio levels.

Freight plans

For the coming fiscal, Ms Banerjee has targeted an ambitious freight tonnage of 993 million tonnes (mt), which is 69 mt more than what the IR will be loading this year. The IR expects a 7.6 per cent growth in overall freight throughput, which it feels is achievable on a 8-9 per cent GDP growth.

With gross traffic receipts of Rs 1,06,239 crore – the first time crossing the Rs 100,000-crore-mark – and total working expenses of Rs 96,450 crore, the IR will be left with a surplus of Rs 5,258.41 crore in 2011-12. The operating ratio – a measure of its profitability – is also slated to improve to 91.1 per cent, from 92.1 per cent in 2010-11 and the abysmal 95.3 per cent of the preceding year.

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