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

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.

Similarly, while the operating ratio — money spent to earn every 100 rupees; which is better when lower — has improved to 88.8 per cent, the target for next year has been kept at a modest 87 per cent.

Bansal, however, made the larger point of the need to realistically revise passenger fares every year. "A modest annual increase of 5-6 per cent in fares over a period of 10 years can provide about Rs 1 lakh crore by way of additional resources, which can substantially increase internal generation component.and can give additional benefits to the travelling public," he said in his speech.

Riding on the increase in freight rates, the railways will mop up an additional Rs 4,200 crore, but its fuel bill next year is going to be around Rs 5,100 crore. The railways has decided to "absorb" the balance. The fare revision carried out recently is estimated to bring in an additional Rs 6,600 crore.

While fares were not revised in the budget, Bansal tinkered with additional components of ticket prices such as reservation fees, superfast charges and tatkal charges. Cancellation charges have also been raised marginally.

The resource crunch, however, did not divert Bansal's attention from projects of national importance and those with strategic value, especially in border areas. He said the Udhampur-Srinagar-Baramulla Kashmir rail project will be given top priority this year.

The task of bringing Arunachal Pradesh on the railway network will also begin soon, with work to link Harmuti and Naharlagun starting this year. The railways will also pursue approvals for lines connecting Bilaspur-Manali-Leh, Jammu-Poonch via Akhnoor, Tanakpur-Bageshwar and Parusuramkund-Rupai.

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