Lalu Express picks up business

Revenue up 15%, target for next year 10%; Cheaper freight, fares to reclaim traffic.

Riding on a buoyant economy, Railway Minister Lalu Prasad has chosen to aggressively chase business by slashing upper-class passenger fares by 10-18 per cent and haulage rates for petrol and diesel by 8 per cent.

In addition, he has offered 30 per cent discounts for the non-peak season and 20 per cent on incremental freight during the peak season to woo more business and improve capacity utilisation of existing railway assets.

In the last couple of years, budget airlines and road transporters have been eating into the railways' share of passenger and freight traffic, respectively. Prasad today declared he would now take the competition head on.

There is no across-the-board increase in either passenger fares or in cargo haulage rates. However, he has effected a fresh round of freight rate rationalisation, which, along with the general buoyancy, will boost goods earnings by over 10 per cent next year to Rs 40,320 crore.

Aided by a passenger revenue increase of 11 per cent to Rs 16,800 crore and a moderate expenditure rise of 9 per cent to Rs 38,300 crore, Prasad hopes to end 2006-07 with a surplus of Rs 4,673 crore, an increase of over 6 per cent from the current fiscal year.

In terms of performance, all the crucial parameters have shown dramatic improvement in 2005-06: operating revenue rose 15 per cent and is projected to grow 10 per cent in 2006-07; record incremental loading (668 million tonnes in the current year and expected to go up by 9 per cent in the coming year); and a marked improvement in the operating ratio (the share of working expenses in gross revenue) to 83.7.

"Our internal generation, before dividend, has reached a historic level of Rs 11,000 crore. This is the same Indian Railways which, in 2001, had deferred dividend payment and whose fund balances had reduced to just Rs 350 crore," Prasad said in his speech in the Lok Sabha.

With a view to sustaining the current investment rate, Prasad has projected a 32 per cent increase in the annual Plan outlay to Rs 23,475 crore, excluding provisions for national projects. Two-thirds of the proposed Plan outlay will be mobilised through internal generation and extra-budgetary resources.

Internal resources will contribute as much as 46 per cent. Significantly, the budgetary support for the railways has been kept at Rs 7,511 crore, marginally higher than what was provided in 2005-06. This has meant that the Indian Railways' borrowing next year will go up 22 per cent to Rs 4,170 crore.

While the minister has increased appropriation to the Depreciation Reserve Fund by 20 per cent to Rs 4,307 crore for 2006-07, the Pension Fund gets 12 per cent more at Rs 7,790 crore.

The appropriation to the Capital Fund has seen a sharp increase of 46 per cent to Rs 3,713 crore. However, the outlay for the Special Railway Safety Fund has been projected at Rs 2,240 crore, lower than the Rs 3,352 crore in 2005-06.

Nevertheless, Prasad today announced steps that would make the Indian Railways garner more passenger traffic. These initiatives include 55 new trains and the introduction of fully air-conditioned special trains christened the Garib Rath with 25 per cent lower fares than the existing AC-III tier rates. All told, the railways expect to cut passenger losses by almost Rs 1,000 crore in 2006-07.

Announcing 2006 as the year of the passenger, Prasad promised service with a smile. Part of the strategy is to reduce charges on e-tickets, allowing rail travel service agents to offer Internet tickets and a new Jan-Sadharan ticket booking scheme.

Although the names of the trains have not been specified, four popular trains will be upgraded to world-class interiors and supporting amenities.