And, with expenses rising unabated, and revenues not following suit, the operating ratio (ratio of costs to revenues) has gone up to around 94 per cent, up from 82 per cent just four years ago.

With a populist Nitish not daring to touch second-class fares, the only way to raise the much-needed funds was to increase freight rates by 4 per cent, thereby increasing the cross-subsidy further. The inflationary potential apart, the railways are certain to lose out on more traffic to the roads sector due to this.

While the Railways ministerhas tried to cut down on profligacy a bit by dramatically reducing the number of new trains introduced this year, at a time when the railways need to spend a lot more on improving existing infrastructure, he has still gone ahead with ambitious projects for broad-guage as well as unviable metropolitan transport projects.

Pleading helplessness to take any drastic steps, while presenting the Budget today, the minister said that ``a policy level decision'' needed to be taken on whether the railways should consolidate the existing rail infrastructure and give priority to modernisation and safety, or whether they should be populist. Who was to take this ``policy level decision,'' he did not say.

Today's freight hikes will yield an additional revenue of Rs 700 crore, while the passenger hikes will give Rs 200 crore. Ironically, in his white paper last year, Nitish had explained the need to stop cross-subsidising passengers by over-charging on freight traffic.

What's worse, the railway's financial position iseven more precarious than it was last year (1998-99). Its surplus of receipts over expenses has gone down dramatically from Rs 2,117 crore in 1996-97, to Rs 619 crore last year -- the railways, in fact, had targeted the year's surplus at Rs 1,655 crore. In the event, the railways had to withdraw Rs 1,313 crore from the Railway Fund to meet expenses, especially those arising from the sharp wage hike of the Fifth Pay Commission. Sharp shortage of funds last year also ensured that the Railways did not contribute enough to the depreciation fund.

The same funds crunch is expected in 1999-2000, though the railways have increased their freight target dramatically -- most experts believe that with the hike in freight rates and the sluggish economy, the Railways will not be able to meet the target. In 1998-99 also, the railways achieved only 424 million tonnes as against the target of 450 million tonnes.

For 1999-2000, the Railways are targeting a surplus of Rs 1,543 crore. To do this, apart from the ambitioushike in freight traffic projections, the railways have been forced to plan to draw down on reserves from the Railway Fund by Rs 1,000 crore. Provisioning for depreciation is also targeted to remain around the same as last year's Rs 1,600 crore. The railways also plan to provide just Rs 2,954 crore for pensions, though the actual obligation under this head is estimated at Rs 3,300 crore.