Highly placed officials of the Vadodara division told Express Newsline that though the railways' sources of income had increased, so had its expenses. So the projected profits were not proportional to the fare hikes.

Point out the officials, ``The prices of material and the wage packets have increased; the cost of maintaining the available resources has also sky-rocketed. Therefore, there has been no comparable rise in income.''

According to sources, the gross traffic receipts amounted to Rs 27,855 crores this year, up from Rs 24,450 crores last year. Increased expenditure, however, has wiped out the marginal gain in receipts: while last year the Railways had a bill of Rs 16,150 crores, this year, it stands at Rs 20,935 crores. But in comparative terms, the expenditure outstrips the earnings this year.

If the financial health of the division ``is not up to the mark it is because of a sharp rise in maintenance and operational expenses'', say sources. ``Earlier, one target could be achieved at a certain cost, but now it costs more to reach that same target.''

According to official records, if the operational ratio in 1993-94 was 82.9 per cent, it had risen to 91.4 per cent in 1997-98. Sources said that this was primarily due to the limited resources.

Interestingly, the ``poor results'' are partly attributed to the Centre's ``populist'' schemes. ``All essential commodities -- including the PDS grains and pulses, salt, edible oil, sugar, fruits and vegetable -- have been exempted from freight charges'', point out sources.

Never mind that these commodities have always been exempt from freight charges.

It is the basic lack of resources that was getting the railways down, sources say. Since the Union budget provides for just 16 per cent of the railway budget, ``we might have to resort to borrowing from the market'', warn official sources.

Since the railways are under constant pressure from State governments to open new lines, develop projects and convert gauges, it might even have to seek equity participation with them, authorities here say.