The economic slowdown has slammed the brakes on the fairy-tale run of the Indian Railways. After crossing passenger and freight targets in the five full Budgets that Railway Minister Lalu Prasad presented, the Interim Railway Budget for 2009-10 showed that India's largest employer would just about cross the targets for 2008-09 for passenger and freight earnings.
This year’s performance, which comes against GDP growth estimates of 7.1 per cent against 9 per cent and more in the previous three years, did not prevent Prasad, the street-smart politician from Bihar, from projecting robust growth in earnings for 2009-10 .
| OFF TRACK | |||
| BE 2008-09 | RE 2008-09 | BE 2009-10 | |
| Total receipts of which | 83,696.89 | 84,233.18 (+0.64%) | 95,306.22 (+13.14%) |
| Passenger earnings | 21,681.00 | 22,330.00 (+2.99%) | 25,000.00 (+11.95%) |
| Goods earnings | 52,700.00 | 54,293.00 (+3.02%) | 59,059.00 (+8.77%) |
| Total expenditure | 67,274.27 | 73,166.66 (+8.75%) | 84,429.74 (+15.39%) |
| Net revenue | 16,422.62 | 11,066.52 (-32.61%) | 10,876.48 (-1.71%) |
| Cash surplus (after dividend) | 20,147.10 | 14,609.44 (-27.48%) | 13,542.55 (-7.3%) |
| All figures in Rs crore; Figures in bracket % change BE: Budget Estimate; RE: Revised Estimate | |||
With elections round the corner, Prasad, with limited room to manoeuvre in terms of raising revenue, left freight rates unchanged and cut passenger fares a marginal 2 per cent.
Prasad also sought a vote on account, sufficient to cover the Railways' estimated expenditure for the first four months of 2009-10.
Though Prasad, acknowledged as one of India’s most successful railway ministers, claimed he had made the elephantine Railways “swift as a leopard”, the worsening numbers were difficult to hide.
The net revenue in 2008-09 fell 33 per cent from what was budgeted and is likely to fall a further 2 per cent next financial year. The cash surplus after dividend also fell 27 per cent from what was budgeted and may fall another 7 per cent next year.
The Railways’ efficiency, as measured by the operating ratio (working expenses as a portion of traffic receipts), deteriorated sharply in 2008-09 over the previous financial year and will worsen in 2009-10.
The numbers for 2009-10 could look worse on at least two counts. One, though ordinary working expenses shot up 34.03 per cent in 2008-09, Prasad has budgeted for a modest 14.26 per cent rise in 2009-10. Two, the provision for depreciation in 2009-10 is the same as in 2008-09 — Rs 7,000 crore. A higher allocation under either account could cut the projected surplus for the year.
Presenting the Railway Budget last year, Prasad had said the operating ratio would fall from 75.9 per cent in 2007-08 to 81.4 per cent in 2008-09. The revised numbers for 2008-09 showed that it had tumbled to 88.3 per cent.
The decline in the ratio was mainly due to spikes of Rs 5,000 crore in ordinary working expenses and Rs 900 crore in appropriation to pension fund. In his speech, Prasad said this was because of the higher-than-budgeted expenditure on the award of the 6th Pay Commission.
The Railways have 1.4 million employees on their rolls and another 1.1 million pensioners. Since the Railways need to pay 60 per cent of the arrears of the award in 2009-10, ordinary working expenses for the year are up Rs 7,900 crore, or 14.36 per cent, over 2008-09.
Talking about the business environment, Prasad said earnings rose steadily till September, when the global downturn struck. As a result, freight revenue growth fell from 19 per cent by end-September to 14 per cent by end-December. Passenger revenue growth, too, softened from 14 to 12 per cent.
Prasad, however, said there was some improvement in traffic during December and January, which would help the Railways achieve their 2008-09 targets. Movement in some commodities has indeed revived. With steel production on the rise once again in China, the production and sale of iron ore has improved in the last few weeks. This could benefit the Railways.
Expectedly, Prasad announced 43 new trains, mostly in the east, the extension of 15 services and increase in the frequency of another 14.
He also announced that the construction of the Eastern Freight Corridor had started on February 10, while that of the Western Freight Corridor would begin later this month. Action would soon be initiated, he said, for a pre-feasibility study to run a Bullet Train between Delhi and -- where else -- Patna.
In his 12-page speech, peppered with Hindi couplets, Prasad highlighted his achievements as the Railway Minister for five years: Cash surplus (before dividend) of Rs 90,000 crore, freight loading growth of 8 per cent (up from 3 per cent during the tenure of his predecessors), fall by almost half in “consequential” accidents, and investments of Rs 70,000 crore in productivity improvement.
During the 15 years that he and his wife Rabri Devi were chief ministers of Bihar, Prasad was accused of doing little work to improve one of India’s most backward states. The stint at Rail Bhawan is expected to mend some of that damage to his image.
Even as he waxed philosophical on the turnaround of the Railways, Prasad took a dig at the private sector. While companies, he said, resorted to “anti-people” measures like price rise, retrenchment and lockout, “the Railways have kept the human aspect as the central focus and achieved an extraordinary feat without putting any extra burden on the common man or the employees”.
Train derails in Orissa, 15 killed
Even as Railway Minister Lalu Prasad claimed in his Interim Railway Budget that the number of accidents had come down to 194 in 2007-08 from 325 in 2003-04, at least 15 people were killed and 42 injured after 14 coaches of the Howrah-Chennai Coromandel Express derailed near Jajpur Road station in Orissa on Friday.
