The Hindu Business Line : Push for goods, shove for passengers

THE restructuring of the Railways received a fresh impetus on Tuesday, with the Railway Minister, Mr Nitish Kumar, going the whole hog in rebalancing tariffs even at the cost of pinching the pockets of millions of ordinary commuters and raising freight rates on subsidised mass consumption items.

After a gap of two years, rail travel will now become costlier, as Mr Kumar has chosen to bite the bullet by proposing an 8-13 per cent increase in passenger fares, including those for suburban travellers, and hike in freight rates of essential commodities such as cereals, pulses, salt, urea and sugar.

The restructuring exercise will hit the ordinary class and sleeper class passengers, who account for the largest number of train travellers, most as they will now have to reckon with fare hike of eight per cent and 11 per cent respectively.

The tariff rebalancing exercise will yield the Railways an additional Rs 1,360 crore over the full year beginning April 1.

Of this, Rs 910 crore would come from fare hikes and Rs 450 crore from freight rate increases.

The extra revenue realisation to the Railways from these lower segments alone works out to Rs 630 crore --Rs 300 crore from sleeper class, Rs 200 crore from second class ordinary and Rs 130 crore from second-class mail/express. On the other hand, the upper classes will together yield just Rs 143 crore, including Rs 50 crore each from AC 2-Tier and Chair Car, Rs 35 crore from AC 3-Tier and Rs 8 crore from I Class. The balance Rs 137 crore is slated to come mainly from higher suburban fares.

Despite officials proclamations of the Rakesh Mohan Committee Report on Railway reforms having been dumped, the Railway Minister appears to have been guided by its recommendations.

This is reflected in the detailed tariff rebalancing exercise, which, in turn, is anticipated to improve the operating ratio x a measure of the efficiency of the Railways.

The new approach which Ministry officials sought to tout as a professional one is expected to propel the Railways on a high-growth trajectory and restore its commercial viability.

With an operating ratio of 94.4 per cent, as against last year's level of 96.6 per cent, the Railways will end the year with a surplus of Rs 1,020.16 crore. The budget comes as a respite to Indian industry, which has historically borne the brunt of high freight rates.

More competitive: Wiser by the experience of having lost a good part of its traffic to the road sector, the Railways is now set to reduce the rates further to become more competitive. The targeting of industry to shore up freight earnings has begun this year with a marginal reduction in freight rates of core commodities including iron and steel, petro products and cement.

By increasing passenger fares, the Railway Minister has essentially carried forward the exercise he had initiated in 1999-2000 x of applying a unique pricing formula that factored in the perceived differences in comfort levels of different classes of travel.

While the average increase works out to around 12.5 per cent, the steepest increase is for the AC chair car segment.

Commuters travelling in this class will have to pay 20 per cent more on short distances.

Fares of existing Rajdhani and Shatabdi Express trains have not been tinkered with.

No changes have been proposed either in the quarterly season tickets, which are charged 2.7 times the monthly season ticket fares.

Status quo has also been maintained on the rates of booking of parcel and luggage, including newspapers and magazines. The freight rationalisation exercise aims at removing the existing distortions, given that there is significant internal cross-subsidisation within commodities.

For distances up to 700 km, the freight rate for pulses and grains has been hiked by eight per cent, for groundnut oil by 12 per cent, urea by six per cent and coal by 0.8 per cent.

Some respite has been provided for core commodities, with freight rates in cement scaled down by one per cent, pig iron by 1.13 per cent and high-speed diesel oil by 1.43 per cent.

The reduction in freight rates of some petro products seems to have been done keeping in view the imminent dismantling of the administered price mechanism (APM) and its impact on rail freight traffic.

With signs of economic recovery being rather bleak, Mr Kumar has chosen to fix a conservative freight target of 510 million tonnes compared to the estimated traffic realisation of 489 million tonnes at the end of this fiscal.

On reverse track: Reversing the track record set by his predecessor, Ms Mamata Banerjee, he has also budgeted a realistic Plan outlay of Rs 12,330 crore. This includes an allocation of Rs 2,210 crore on safety works through the Special Railway Safety Fund.

The Finance Ministry has been liberal this time around, channelising Rs 5,840 crore as Budgetary support. Besides, Indian Railway Finance Corporation (IRFC) is mandated to raise Rs 3,000 crore from the market.

However, the burden of lease rentals will continue to put pressure on the monolith’s finances.

Lease rentals alone are projected to top Rs 3,434 crore in 2002-03, as against the revised estimate of Rs 3,250 crore during the current fiscal.

At the same time, however, Mr Kumar has sent out positive signals to the Finance Ministry by committing to pay a dividend of Rs 2,679 crore for the coming fiscal. The Railways will also generate around Rs 2,630 crore internally to finance Plan investments.

For the first time, the Minister has also come up with an ‘innovative’ formula for equitable distribution of Railways projects among States based on three major criteria: throwforward of projects, area and population of the State.

Keeping in view the overall resource constraints, the outlay for new lines and gauge conversion projects has been stepped up by six per cent.

On the other hand, investments on track renewals have been increased by 21 per cent and rolling stock (with extra Budgetary resources) by 30 per cent.

The Railways expects a 10 per cent increase in passenger earnings on the back of a four per cent increase in traffic.

The introduction of Jana Shatabdi trains, seven new passenger trains, 25 additional express trains and extension of 16 services feature in the Budget.

At current fare and freight rates, the Gross Traffic Receipts are estimated at around Rs 40,178 crore, Rs 2,548 crore higher than the revised estimates of 2001-02.

Ordinary working expenses are projected to increase by around seven per cent to Rs 31,160 crore. After appropriations to the pension fund and depreciation reserve fund, and payment of the dividend liability, the Railways will end the next fiscal with a surplus of Rs 1,020 crore.

Send this article to Friends by E-Mail

Stories in this Section
Cut deficit, lift growth: Survey

Push for goods, shove for passengers

Stocks give 99-pt salute to Survey, rail budget