Logistics

‘This Rail Budget gives you money, facilitates growth'

Mamuni Das Ashwini Phadnis | Updated on March 12, 2018 Published on March 18, 2012

Mr Vinay Mittal, Chairman, Railway Board





“Search me! I'm keeping my fingers crossed.” That was the reply of Mr Vinay Mittal, the Railway Board Chairman, when asked about what could derail the proposals of this Railway Budget.

This interview with Business Line was conducted immediately after the Budget presentation.

Given that this Budget has become historic — with indications that the Minister who presented this Budget could be on his way out because of personal and ideological differences with the leader of his political party, the days ahead for the Railway Board Chairman could probably get tougher.

Could you share top few points from the economic strategy perspective that are good about this Rail Budget?

First, Railways are at least beginning to make an effort towards recovering some cost of operations. We are a commercial organisation with social responsibility (passenger operation losses for railways are of the order of Rs 20,000 crore annually). But having said that, we are also a commercial organisation and no commercial organisation could run without covering operational costs.

After all, money makes the mare go. Unless you have adequate funds, you cannot augment your service quality (to passengers and freight customers), you cannot augment line capacity.

Without this, you cannot go to the next level of growth. So, that is why this is a Budget that gives you the money in your hands.

It facilitates that growth. It puts you back on the path of recovery. So, you can spend money where it was required, you can take care of safety issues which were becoming a cause for worry.



On the recent hike, in percentage terms, aren't the lowest passenger segments taking the maximum hit?

Percentages are deceptive, they can be very misleading. If you say I've taken two steps, out of which one I had walked one earlier, then we are talking about a 100 per cent change. Percentages can be so misleading, they are a devil.

What prompted the recent double-digit freight rate hike?

Freight hike has not been an ad-hoc hike. It has been a very well thought out hike on the base rate, for which there was a crying need. Fact is, even today (after the hike), we are unable to completely neutralise the increase in input costs.

Even now, we have not been able to neutralise the entire costs.

So, if the market can absorb, then we are ok. But, if they can't, then we obviously have an issue.

After all, what does this hike effectively mean? The 25-kg bag [of] wheat goes up by Rs 1.30, jaggery 20 paise, coal some 3.5 per cent, hike on end product of steel is 1.5 per cent. Ideally, various institutions on the way should absorb this. Why should only railways keep suffering?



Last budget, there was an announcement about a new passenger segment, that of special A.C. segment for passengers. What is the status of that?

That will come out … . The prototype is still under development.



What is the status of the dedicated fund, Prime Minister Rail Vikas Yojna?

For the Prime Minister Rail Vikas Yojana, we will float the proposal for inter-Ministerial consultation soon.

What are your key concern areas? What is it that could derail your robust plans for next year?

(With a how-could-you -have-such-cruel-thought look) Search me … I am keeping my fingers crossed!

What is the pension cost, staff cost and fuel cost for railways in the current fiscal and next fiscal?

Pension cost, in 1991-92, railways had a pension bill of Rs 1,050 crore. This year, it is Rs 17,000 crore, next fiscal it could be Rs 18,500 crore.

Our staff cost, as a per cent of ordinary working expenses were at 44 per cent (2004-05), peaked at 57 per cent in FY2009-10. Now in 2011-12, it is 52 per cent of OWE and in FY 2012-13, it should be 51 per cent.

As for total fuel cost, they have remained at steady at 19 per cent (2004-05). They are at 18 per cent today, and are projected to come down to 16 per cent in FY2012-13.



You have talked about a fuel adjustment component.

There is no indication in his Budget that it would be implemented. In case there are wide variations, we will consider the proposal.



If the Finance Minister were to implement a service tax, would Railways consider a rollback? (Two days after the interview, an effective 3.6 per cent service tax was proposed by the Finance Minister.)

Freight has a dynamic tariff structure. Everything depends on the market. If the market can absorb, we will be okay with it. Otherwise, we will have to see. It's too dynamic a question for me to answer in a static manner.



Published on March 18, 2012
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