Rails and polls

By Our Economy Bureau | 26 Feb 2003

New Delhi: The Railway Budget for 2003-04 proposes no increase in passenger fares and freight rates. Rationalisation of fare structure for Rajdhani and Shatabdi trains will result in lower basic fares for most pairs of stations in these trains.

Concessional fares for non-peak period between 15 July and 15 September 2003 in AC 1^st Class and AC 2-tier in all Rajdhani trains is being proposed.

Presenting the Budget for 2003-04, Railway Minister Nitish Kumar said the scales for charging of parcel and luggage rates will be reduced from seven to four with ratio between highest and lowest rates to be reduced from 8.7 to 6.2.

To make the freight rates competitive, it is proposed to reduce the classification of certain commodities where the Railways are facing stiff competition due to high freight rates. The classification of petrol for train-load movement is proposed to be reduced by three stages from Class 280 to Class 250, lowering the freight rates by 10.7 per cent.

The classification of certain other commodities is proposed to be reduced by two stages. These include high speed diesel oil, furnace oil, crude oil, naphtha, liquified petroleum gas, compressed gases, lubricating oils, iron and steel, pig iron, iron scrap, cement sheets, petroleum coke and soda ash.

Kumar said fares of Rajdhani and Shatabdi trains will be linked to rationalised fares structure of mail and express trains, fixing the basic fare for each class of Rajdhani and Shatabdi 15 per cent higher than fares of corresponding class of super fast mail and express trains.

Says Paras Adenwala, head (equities) Birla Mutual Fund: “The Railway Budget can be termed as a populist budget with no hikes in fares but actual cuts in freight rates. While this would make both the common man and the businessman happy in the short term, I doubt it would do any good in the long term. Railway infrastructure needs to be urgently upgraded. This cannot happen if the revenues do not improve. However, being an election year, it would be improper to expect anything rational.”

Railways Plan fixed at over Rs 10,600 crore
The Railways Plan for 2003-04 has been fixed at Rs 10,607 crore — Rs 603 crore higher than the revised estimates of the current year. Kumar said taking into account the outlay of Rs 2,311 crore on safety-related works through the Special Railway Safety Fund (SRSF), the outlay comes to Rs 12,918 crore.

For the coming year, the total funds received from the general exchequer are Rs 6,577 crore including Rs 1,600 crore as contribution towards SRSF and Rs 433 crore from the Central Road Fund (CRF).

This also includes Rs 730 crore specifically for investment in the newly created Rail Vikas Nigam. The corresponding figure for 2002-03 was Rs 5,840 crore including Rs 1,350 crore for the SRSF and Rs 450 crore from the CRF.

Apart from this, Rs 730 crore has been earmarked for several works in the plan-heads, new lines, doubling, gauge conversion and railway electrification. The outlay on safety related heads, inclusive of outlay given under the SRSF, is Rs 2,605 crore for track renewals, Rs 302 crore for the bridges and Rs 689 crore for signalling and telecommunications.

In addition to the budgetary support, the Railways proposes to provide Rs 2,630 crore for plan expenditure through internal resource generation. This is at the same level as budgeted for the last year.

The balance requirements of the Plan would be met through extra-budgetary resources, which include Rs 2,970 crore as market borrowings from the Railways Finance Corporation and Rs 30 crore as investment through a BOT project in the Biramgam-Mehsana gauge conversion work.

Railways aims at 11% jump in revenues
The Railways will end the next fiscal with a surplus of Rs 600 crore on the strength of a 11-per cent increase in revenue despite no hike in freight and fares, and a substantial rise in working expenses and outgo for pension.

The Railway Budget targets to generate an excess Rs 600 crore during 2003-04 compared to Rs 550 crore this fiscal. The budget estimates 6.4 per cent rise in gross receipts from traffic at Rs 43,495 crore during 2003-04. The Railways had targeted higher receipts at Rs 41,538 crore in the last budget but revised its estimate to Rs 40,867 crore for this fiscal.

However, the Railways would witness over 9 per cent rise in pension outgo and another 7 per cent rise in working expenses next fiscal.

While appropriation to the Pension Fund would go up to Rs 6,385 crore next fiscal from Rs 5,840 crore in this fiscal, ordinary working expenses are targeted at Rs 32,460 crore during the next fiscal compared to Rs 30,310 crore in 2002-03.

The total working expenses is slated to go up to Rs 40,850 crore in 2003-04 from Rs 38,153 crore in this fiscal. The Railways was able to restrict its expenses slightly this fiscal from the Rs 39,128 crore budgeted last.

Says Transport Corporation on India managing director Vineet Agrawal: "This year's Railway Budget sounds good for the freight industry, keeping in mind that there have been no increase in the freight rates and classified categories have been reduced from 32 to 27. But issues such as inefficiency and cross-subsidisation still need to be addressed."

Sums up M Balasubramanian, head, (income funds), Birla Mutual Fund: “The Railway Budget has reduced the freight rates on petroleum products, cement, pig iron and some other commodities. Passenger fares are also left untouched. That means, this budget has not focussed in increasing the overall revenue but has addressed the growth concern for the domestic industry. The budget is infrastructure-focussed. The overall borrowing target is also set higher by Rs 400 crore compared to last year. This could increase the supply of bonds from IRFC in the coming year.”