In an attempt to regain traffic lost to road and air transport, the Railways have decided against increasing passenger fares and freight for the next financial year. Railway Board Chairman IIMS Rana explained the rationale behind the move and said the focus would be on passenger safety, security, cleanliness and punctuality. Excerpts:
What is the focus of the Railway Budget this year?
This is an innovative budget. The focus is on increasing revenue without raising fares and freight. We have adopted a combination of innovative ideas and technology to improve the financial health of the Railways. Our aim will be to enhance passenger satisfaction and change the organisational attitude towards safety, security, cleanliness and punctuality. Our performance has exceeded expectations. Goods earnings have increased and Rs 850 crore has been saved in working expenses. We are likely to end the year with an operating ratio of 92.5 per cent.
Also Read
Were Rajdhani, Shatabdi and Jan Shatabdi fares reduced because you were losing passengers to airlines or was it a political decision?
The rationalisation has nothing to do with populism or loss of traffic. Each of our decisions has a logic and I can prove it to you. We felt there was a case for fare rationalisation this year. We expect increased goods loading due to reduced cargo and parcel rates . Through freight rationalisation, we hope to address the issue of overpricing so that our share in freight increases. We also felt that trains like Rajdhani and Shatabdi were not sufficiently patronised and, therefore, decided to reduce fares on these trains.
What was the reason for the decrease in passenger traffic?
Passenger traffic dropped 3 per cent, but it was not due to accidents. There was a decrease in traffic because fares were rationalised last year as also because of the Godhra incident. Despite this shortfall, earnings went up 12-13 per cent. We concluded that there was no reason to raise fares.
How do you propose to reduce the operating ratio?
Nearly 50 per cent of the cost is on account of employees, 20-25 per cent due to store costs and 10-15 per cent due to fuel costs. About 3 per cent employees retire every year and we fill up only 1 per cent of the vacancy, so here we save on the 2 per cent. We have decided to reduce the inventory, for which we will enhance computerisation, introduce standardisation and reduce life-cycle costs every year. We are also installing fuel-efficient kits in trains and taking other initiatives to reduce fuel costs.
Do you think that the squeeze in investment will stop development?
There is no squeeze in investment and we have initiated a lot of steps like special purpose vehicles with the Mundhra Adani Port and states to further development. We are also targeting 1,400 km of new track in 2003-04, compared to 1,337 km last year. So, development work will not be affected.
What are the reform measures being undertaken by the Railways?
There are three major reform initiatives. First, the Rail Vikas Nigam, which will identify viable projects and receive approvals from the Railway Board. It will work like an independent company and will have powers to clear projects up to Rs 200 crore. Under this system, project clearance will be faster, which will result in faster economic growth. Second, we are carrying out accounting reforms, which will help us to estimate the cost of services. Third, we are trying to turn our production units into profit centres.
These units will be allowed to compete in international markets, which will help us to increase export revenue.