Reform Express rolls, rail budget links fares, freight rates to the price of fuel

Grappling with limited resources, Railway minister Pawan Kumar Bansal chose to play it safe in his maiden rail budget Tuesday, avoiding announcing over-ambitious projects and trains, and at the same time refraining from increasing basic passenger fares ahead of elections due next year.

Instead, in a major reform move, Bansal for the first time linked passenger fares and freight rates to fluctuating prices of diesel and electricity.

Starting April 1, freight rates will see a jump of a little more than 5 per cent over existing rates due to the imposition of a fuel adjustment component. The next time diesel prices are raised for bulk consumers such as the Railways, passenger fares will be impacted too.

This revision will be carried out every six months. Bansal said this could see rates fall if fuel prices fell. However, the fare-change would not be automatic — the ministry would observe fuel prices on a half-yearly basis before taking a call.

A tariff regulatory authority, spelled out in the last budget, will also see the light of day soon. The Railways will send the specifics for inter-ministerial consultations.

By announcing just seven new factories and just about 100 new trains, including 67 long-distance Mail/Express trains, Bansal presented a stripped-down budget that, unlike in the past, stressed on reform more than political ambition.

Prime Minister Manmohan Singh called it a "reformist and forward-looking" budget, one that "presents a realistic picture of railway finances".

But opposition parties criticised it for being "pedestrian" and "discriminatory". BJP leader Gopinath Munde said it was more of a "Rae Bareli budget", accusing it of favouring Congress president Sonia Gandhi's Lok Sabha constituency.

Quoting Kautilya in his budget speech, Bansal said, "All undertakings depend upon finance. Hence foremost attention shall be paid to the treasury." Going with that spirit, Bansal projected a modest plan outlay of Rs 63,363 crore for the next fiscal. Although it is the highest for the Railways, it is only a couple of thousand crore rupees more than the last rail budget.

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