Rail Budget: finances go off track

Today, the Railway Budget 2009-10 was presented by the railway minister Mamata Banerjee. It was her maiden budget and she left no stone unturned to announce populist schemes, the hallmark of every rail minister. When the times were mostly good, as in the previous government’s tenure, it didn’t pinch but in a slowing economy, it is undoing the strong position the railways made for itself in the past five years.

Rail fares have not been hiked. So freight and passenger fares will remain constant. In the past, there have been instances where freight rates have been left unchanged but commodities have been re-classified. This had the same effect of a fare hike. If this happened, it will be known only later.

New trains/extensions
In Lalu Prasad Yadav’s interim budget, announced on February 13, 2009, he had announced surveys for 14 lines, three gauge conversions and eight doubling of lines. He had also announced 43 new trains, 14 extensions and 14 trains whose frequency will increase.

With the change in guard, it can be presumed that these are history and replaced by what is presented in the main Budget. The minister announced 57 new trains, 27 extensions and an increase in frequency for 13 trains. Needless to say, both ministers leaned towards their own states in naming new trains and extensions.

Passenger comforts
The railways will develop 50 stations as world class stations. Innovative financing and PPP have been mentioned, but details are awaited. It will also develop 375 stations, as Adarsh stations, of which 309 have been identified, with basic facilities like toilets, waiting rooms and dormitories.

Commercial development of some stations will be done, with budget hotels, parking, and shops being developed in the vicinity of the stations, on railway land.

New services and schemes for passengers

  • An air-conditioned double-decker train to be introduced between cities
  • Yuva train to be introduced – only for young people to travel, novel and pointless
  • Izzat – a monthly pass of Rs 25 for travel upto 100kms for the poor, with income up to Rs 1,500.
  • Extension of student concessions to Kolkata metro
  • Duronto (fast in Bengali): this will be a point-to-point service between important cities.
  • Premium service for time sensitive cargo being considered
  • New schemes for logistic parks, multi-modal logistics and private freight terminals
  • Super-fast express parcel trains running from Tughalakabad to Chennai, Vapi (Gujarat) and Howrah.

The bottom-line
The total expenditure (plan outlay) has gone up from Rs 37,905 crore in the interim budget to Rs 40,745 crore in the final budget. Last year’s expenditure was Rs 36,336 crore. Though expenditure has risen by 12%, railway’s income is projected to increase only by 10%.

Its cash surplus during 2009-10 is projected at Rs 14,201 crore against Rs 17,400 crore in the previous year. And its operating ratio is projected to deteriorate from 89.9% in the interim budget to 92.5%. That means, after meeting operating expenses, the railways have only 7.5% of revenues left for other expenditure.

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