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Well done, Railways

For the fifth consecutive year, Railway Minister Lalu Prasad has succeeded in presenting a budget that not only does not raise fares and freight charges but actually lowers most passenger fares and the freight on inflation-sensitive goods. With the economy on a roll and the Indian Railways maintaining its competitive edge, Mr. Prasad has been able to sustain the growth momentum, projecting a freight loading of 790 million tonnes this year. He has reported a cash surplus of Rs.25,000 crore, the highest ever, which he boasted “makes us better than most of the Fortune 500 companies in the world.” What makes this performance even more commendable is the fact that the Railways has managed easily to digest the additional input costs, especially the increase in diesel prices, over the past few years. At least in freight movement, the ‘dynamic fare’ system, which raises the charges by 6 to 7 per cent during the ‘peak season’ that lasts nine months in a year, has taken care of these costs. It is on the passenger front that the productivity improvement comes through strongly: despite the frozen fares, there was a 14 per cent increase in earnings.

The highlight of the 2008-09 budget is the Plan outlay itself. Quite remarkably, the Railways has managed to secure a Rs.37,500 crore plan for the year ahead, marking a 21 per cent increase over 2007-08. With just Rs.7,874 crore coming from the general revenues of the Central government and another Rs.774 crore from the Central Road Fund, 79 per cent of this Plan will be funded through internal and external budgetary resources. The concessions to passengers include a 5 per cent reduction in second-class fares and (partly to compete with dropping air fares) a 2 to 7 per cent lowering of fares for air-conditioned sleeper coaches ranging from three-tier to first class. The railway fare concession for senior women citizens has been raised from 30 to 50 per cent and girls and young women will be eligible for free season passes on suburban trains until they graduate. The Minister has promised a Vision 2025 document in six months, and a massive scheme for ‘Green toilets’ in all coaches. The rationalisation of the freight structure has been completed, with a 5 per cent reduction in the rates for petrol and diesel. Where Mr. Prasad needs to do better is to get a strong focus on safety: the scheme to man unmanned level crossings with gangmen must be implemented speedily. As a more intensive use of the tracks means faster wear, renewals, gauge conversion, and doubling should get top priority. The unmet demand for route extensions and complaints of discrimination against some States, notably in the north-east, need to be responded to positively. Overall, the Railway budget tries to harness the growth momentum in the economy and sustain its own growth in both freight and passenger traffic with services that compete well in the market. The bottom line is it has shared the profits with its customers and passengers.

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