Reformer Lalu puts railways on track

RAILWAY BUDGET 2005-2006

Freight rejig to mop up Rs 650cr more; no fare hike; earnings may go up 10%.

Railway Minister Lalu Prasad today used the buoyancy in the demand for railway services to increase freight rates marginally, a move that will fetch an additional Rs 650 crore. But in keeping with his image, he left passenger fares untouched.

The bulk of the additional revenue from freight will come from the reclassification of items like grain and iron ore meant for exports. The rates for cooking gas, kerosene, naphtha and petrol have, however, come down by 2-4 per cent.

With traffic earnings projected to grow at an average 8.9 per cent and a moderate 7 per cent growth in expenditure, the railways are aiming to end the next fiscal year with a surplus of Rs 1,976 crore, an increase of 14.5 per cent over the current year.

In his second railway budget, Prasad also increased the appropriation to the depreciation reserve fund by 35 per cent to Rs 3,604 crore and to the pension fund by 6 per cent to Rs 6,940 crore.

The annual Plan outlay for the next year is projected to grow by 5 per cent to Rs 11,827 crore, while market borrowings will be pegged at Rs 3,400 crore, the same as in the current year.

The minister took care of the railways' future investment needs by announcing a Rs 24,000 crore integrated modernisation plan spread over five years and gave a big push to reforms by proposing to reduce the wagon turnaround time from six days to five and allowing the private sector to run container trains, thus ending the monopoly of the Container Corporation of India.

The railways have shown an improvement in efficiency as their operating ratio --- expenditure to traffic receipts --- is projected to improve from 91.2 to 90.8 for 2005-06, the lowest in the last eight years.

A key initiative is in the area of freight rationalisation and increased public-private partnership in freight movement. The minister reclassified 4,000 commodities into 80 groups and introduced a new scheme guaranteeing supply of wagons to customers.

The railways have carried 600 million tonnes of goods this year, 20 million tonnes more than budgeted. For 2005-06, the railways are expecting to carry 35 million tonnes more.

The capacity to carry more traffic has improved because of a comfortable position in wagon supply and the minister plans to make wagon utilisation more effective instead of spending more on wagons.

The passenger segment showed a 6 per cent increase in earnings, which was double of what was budgeted. The coming year is expected to see a growth of 7.4 per cent in passenger earnings to Rs 15,080 crore while goods revenue is expected to grow by 9.9 per cent to Rs 33,480 crore.

The government's investment in the railways has increased only marginally by Rs 210.81 crore, taking the gross budgetary support to Rs 7,230.81 crore.

An additional Rs 1,723 crore is expected to come from the government for funding the viability gap in projects identified for the private sector and for national projects.

Freight rejig to mop up Rs 650 cr more; sugar, sponge iron hit

No fare hike; Rs 24,000 crore five-year modernisation plan

Freight earnings may go up 10%, expenses 7.5%