Ever since Lalu Prasad took charge as the Railway Minister in the UPA government, he has been springing surprises every year. This year, in his budget presentation for the financial year 2008-09, Lalu actually cut fares for passengers in all classes, gave an extra discount to female senior citizens, lowered freight rates for crucial products – petrol and diesel. Surely, there will be people from the opposition who will criticise the minister for something or the other, but thinking dispassionately one must agree that the Indian Railways has done a fantastic job in business management.
The Indian Railways, which earlier used to be bailed out by the finance ministry, is now churning out massive cash surpluses and paying large dividends to the government. In 2007-08, it is expected to generate a cash surplus of Rs 25,000 crore, 25 per cent more than last year. The Railway's cumulative cash surplus in the last four years has reached a whopping Rs 68,778 crore. In 2007-08 the Railways' return on capital employed was a mind boggling 21 per cent, a figure for which many corporate big bosses may envy Lalu.
The most remarkable achievement of the Railways is that taking advantage of the booming economy, it could squeeze out much more revenue from all sources, and this was done mainly through higher and efficient utilisation of its assets. In 2007-08, for example, the Railways added 3000 extra coaches to existing trains and earned an additional revenue of Rs 2000 crore. Revenue from freight and passenger traffic in 2007-08 is expected to be 14 per cent higher than last year.
Taking advantage of the revenue buoyancy, Lalu has made a brave attempt to win back passengers from cheaper airlines and freight from road transport by offering discounts in off-peak seasons. He has risen to the occasion to combat competition, an unusual exercise from a gigantic and old government organisation. Besides, the concessions may pay dividends for his party and the UPA government in the next general election. The five per cent reduction in freight rates for petrol and diesel, if passed on to the consumer, will witness a reduction in their prices.
The Railway budget, surely, will help fight inflation. Lalu has also promised to spend close to Rs 70,000 crore in the next seven years for line augmentation. He has also introduced 10 Garib Rath (IInd class AC) and 52 new trains, which is also a record for the Railways. By any standard Lalu has once again done a great job and must be complimented. There is unhappiness in Karnataka about what it has got from the budget. But the minister still has the time to make amends.
