The railway ministry has been advised to go for market borrowings, reduce cross-subsidisation on passenger fares and impose a new cess to raise additional resources for its modernisation programme in the Railway Budget 2005-06 to be presented on February 26.These suggestions were made during the various meetings railway ministry officials had with the Prime Minister's Office, the finance ministry and the Planning Commission, railway ministry sources said.One such meeting was held at PM's office yesterday as part of last-minute efforts to finalise the nitty gritties of the budget.Railways had demanded Rs 5,000 crore budgetary support, which the finance ministry turned down saying they cannot raise it beyond Rs 1,500 crore from the present level of Rs 1,180 crore due to financial constraints."Instead, the finance ministry and the Planning Commission suggested that railways meet the additional expenditure by reducing cost subsidisation on passenger fares, market borrowings and leving a modernisation cess on the lines of the safety cess imposed earlier," officials said.With Railway Minister Lalu Prasad apparently opposed to any hike in passenger fares, officials said the Railway Budget may opt for all the three options.Officials added that the railway ministry has finalised the budget, but it was yet not clear which option will be implemented to raise resources.The annual plan size of Rs 14,498 crore in the current fiscal is expected to rise substantially for the next year in view of the UPA government giving special emphasis on development of rail infrastructure in its national common minimum programme (CMP).The ministry is also of the view that any further hike in the freight rates of coal, cement, steel, petro products, oil and lubricants will have a cascading impact on prices and will fuel inflation.In the recent past, they said, freight rates have been increased by 12% in 1997-98, 4% in 1999-2000, 5% in 2000-01 and 3% in 2001-02. Since then, there has been no hike in freight rates.The UPA government had increased freight rates by 7.7% to offset the burden of Rs 1,550 crore, including Rs 950 crore on account of three hikes in fuel prices.A steep hike in steel prices put an additional burden of Rs 600 crore for the full year, and the November 22, 2004 hike yielded about Rs 1,300 crore, leaving a gap of Rs 250 crore."This is expected to be offset through minor rationalisation in freight rates," railway ministry sources said.
