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

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 and Bansal said this could see rates fall as well if fuel prices decrease.

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 his predecessors,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”.

Finance Minister P Chidambaram termed it as “practical and implementable”,and said that Bansal had presented the finances of the railways in a very candid manner.

Quoting Kautilya in his budget,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 ever for the railways,it is only a couple of thousand crore rupees more than last rail budget.

Similarly,while the operating ratio — money spent to earn every 100 rupees; which is lower the better — 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 Reform Express rolls,rail budget links freight rates to the price of fuel can give additional benefits to the travelling public,” he said in his speech.

Riding on the hike 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.