Rail budget: Passengers spared, freight rates hiked

Sparing a passenger fare hike but raising freight rates again, Minister Suresh Prabhu presented his maiden budget for Indian Railways Thursday, with a slew of measures to improve service quality, safety and reach and a 52-percent jump in plan outlay for 2015-16 at Rs.100,011 crore ($16.7 billion).

Raising some passenger train speeds by 50 percent on nine key routes, faster freight trains, user-friendly ladders to mount upper berths, wi-fi in 400 stations, more money for escalators, easier norms for unreserved tickets, 17,000 bio-toilets in trains, better connectivity in north-east and cameras for safety of women travellers are among the other highlights of the budget.

"There will be no hike in passenger fares. We will focus on improving passenger amenities, including cleanliness," Railway Minister Prabhu said in a 66-minute speech in the Lok Sabha, watched keenly by Prime Minister Narendra Modi who had handpicked him for the job.

Even though Prabhu made no mention of any revision in freight tariff in his speech, as has been the norm in the past, the minister, nevertheless, revised it upward between 2.1 percent and 10 percent, not sparing even commodities like grain, pulses, urea and coal.

In the previous budget tabled by the Modi government in July last year, passenger fares had been hiked by nearly 15 percent while the freight tariff was increased by 6.5 percent.
The minister also promised a vastly improved operating ratio, which spells out how much money is spent on day-to-day operations to earn revenues -- an indication of the funds left for safety and expansion.

He targeted to bring it down to 88.5 percent, or the lowest in nine years, from an unsustainable level of 93.6 percent in 2013-14 and 91.8 percent for this fiscal. This is better than what the prime minister had asked the railways to do a few days ago.
Globally, a 75-80 percent or lower ratio is seen as a healthy benchmark.

Prabhu also seemed to have ruled out the sale or leasing of surplus land and other assets to get revenues. "We will monetize our resources rather than sell," he said, adding: "Business as usual of asking for budgetary support from finance ministry is neither sustainable nor necessary."

He pegged a 52 percent jump in the plan outlay for 2015-16 at Rs.100,011 crore, projecting a 16.7 percent growth in passenger earnings and 13.5 percent in freight. The minister has also proposed a 46.5 percent increase in market borrowings to bridge the fiscal gap.

Soon after the budget presentation, Prime Minister Modi gave a thumbs up to Prabhu. "Rail budget 2015 is forward looking, futuristic and passenger-centric, combining a clear vision and definite plan to achieve it," Modi said in a tweet, even calling it a watershed moment for railways.

The same, however, was not true with the markets, with the sensitive index (Sensex) of the Bombay Stock Exchange falling some 260 points, or nearly 1 percent, with most stocks of companies associated with railways ending in the red.

Indian industry, by and large, welcomed the proposals notably the substantial hike in the plan outlay and the emphasis on private-public partnerships for big-ticket projects. But some captains of industry felt the freight hike could have ben avoided.

The minister began his speech with what ails Indian Railways.

"Railway facilities have not improved very substantially over the past few decades. A fundamental reason for this is the chronic under-investment in Railways, which has led to congestion and over-utilization," he said.

"As a consequence, capacity augmentation suffers, safety is challenged and the quality of service delivery declines, leading to poor morale, reduced efficiency, sub-optimal freight and passenger traffic and fewer financial resources. This again feeds the vicious cycle of under-investment," he said.

"This must be put to an end," said the chartered accountant-turned-politician, while presenting the budget for one of the largest railway networks in the world. "We have to make our Indian Railways a benchmark organisation in safety, security and infrastructure," he said in a speech peppered with several Hindi couplets.

Playing with words, he also invoked God (Prabhu) and said: "One of the first things I asked, 'hey prabhu' how will all this be possible." Then, amid laughter, he went on to add that while 'prabhu' as in god did not reply, he took it upon himself, the mortal 'prabhu', for overseeing the rebirth of Indian Railways.

Earlier the minister presented a white paper on Indian Railways, which he said will form a trilogy of what plans he had in mind for one of the largest such networks in the world along with his budget for 2015-16 and a Vision 2030 document to be presented later in the year.

He also set four goals to transform Indian Railways: Improved customer experience, safer travel, modern infrastructure and financial self-sustainability. "We will also create a separate department for taking care of cleanliness."

For the record, India boasts one of the oldest and the largest railroad networks in the world, ferrying some 23 million people, or a population the size of Australia, as also 2.65 million tonnes of goods on its coaches, each day.

It serves from 7,172 stations via 12,617 passenger and 7,421 freight trains on a track network spanning Baramulla in the Himalayan foothills of Kashmir to the southern tip of Kanyakumari in Tamil Nadu, and from Naharlagun in Arunachal Pradesh to the port town of Okha in Gujarat.