Populism high on reform agenda

RAILWAY BUDGET 2007-08/ EXPERT VIEWS: A V Poulose

Riding on a record-breaking operating ratio of 78.7, Railway Minister Lalu Prasad has presented a budget with loads of populist "goodies", laced with several laudable reform measures.

The increase in interest income of over Rs 1,000 crore is an accounting adjustment, a transfer of interest earned on fund balances from the funds themselves to revenue.

The reduction of passenger fares across the board is all right as a short-term measure, but in the long run bridging the gap between costs and recovery will present serious problems. The railways is suffering a loss of Rs 5,000 crore per annum on passenger services. This gets loaded on to freight rates. It is some consolation that freight rates have been held for the present.

Providing facilities in trains to passengers, cushioning of seats, new trains, extended trains, universal enquiry number, e-ticketing, selling tickets and reservations through ATMs post offices and petrol pumps, monthly season tickets through smart cards and so on, and the projected investment of Rs 5,000 crore in the Mumbai suburban sector will be welcome.

Initiatives for improvements in the freight business for attracting a higher share of traffic in cement and steel and container traffic are also welcome, but these will have effect only in the long term.

In the annual Plan of the budget year, out of Rs 3,1000 crore, only Rs 7,611 crore will come from general revenues, as against Rs 7,850 crore in the current year. It should have been more considering the massive investments required.

It is 14 years since the pricing aspects were reported by the Nanjundappa Committee. It is time to set up a similar committee.

A V Poulose Former Financial Commissioner, Railway Board