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Railway budget bypasses second generation of reforms: CII

Commenting on the Railway Budget, which was placed in Parliament on Monday, Arun Bharat Ram, President, CII in a press release, stated that the Railway Budget had bypassed the second generation of reforms.

Against the backdrop of poor financial health, the railway minister should have taken bold, pragmatic and visionary measures to put the finances of the railways on track, he added.

The president, particularly, expressed concern on the virtual wipe out of internal resource generation and accruals, with the unsustainable operating ratio at 98.5 per cent and budgeted at 98.8 per cent for the year 2002.

This clearly reflects the urgent need for restructuring of the railways system and laying stress on fundamental reforms, he stated.

It is most unfortunate, Ram added, that the passenger fares have not been revised for the second consecutive year while the already high freight rates have been increased further, thus almost certainly speeding up the increasing marginalisation of the railways in the national commerce.

This, he said, goes against the intention of the railway minister to raise the share of railways in freight to 50 per cent by 2010 from 40 per cent now.

The freight hike of 2 per cent in coal and steel, 1 per cent in furnace oil and 3 per cent across the board is particularly alarming against the backdrop of fall in freight earnings.

The freight rate hike on critical inputs like steel, coal and cement would also adversely impact industry especially at a time when it is in the grips a slowdown.

Phasing out cross subsidisation was a major demand of the industry for a long time and in the absence of any measures to rationalise the freight and passenger fares, CII feels the railways would lose its share to the roads all the more.

In fact, given the huge cost escalation of Rs 9 billion due to hike in fuel and Rs 40.22 billion on account of pension liabilities, the users would not have grudged a modest hike in passenger fares, Ram commented.

The world over, both in the developed and developing countries, the ratio of passenger km charge to a freight tonne km charge is about 3:1 but in the Indian Railways this ratio is just 1:3.

He also expressed concerns over almost no change in the plan outlay for the current year at Rs 110.90 billion over the budgeted outlay of Rs 110 billion for 2000-2001, thereby sending very negative signals. A new direction could have been given by re-orienting the priorities and rationalizing the freight and fare structure and growth momentum triggered.

Wagon procurement is pegged at 23,000 for the current year, which is the same as last year, whereas 50,000 wagons are over-aged and needed to be replaced.

To improve the finance and operational revenue of railways there were a number of schemes suggested by CII such as door to door services, on schedule freight trains and master plan for selling of air space over the railway platforms. But they have not found a place in the railway budget.

To improve the passenger revenue, CII had suggested guaranteed reservation for upper class passengers and this was also announced in the last budget.

CII is disappointed to note that this has not found place in the current budget.

While the rail-tel has been formed to lay the optic fibre, the progress has been slow and it should be expedited.

The revenue target set up by the ministry from non traditional sources has been short of target and it is a matter of concern and need to be pushed further.

The CII, however, complimented the Railway Minister Mamata Banerjee for attempting to consolidate the earlier initiatives and unfurling some new measures such as decentralization of powers to zonal railways, continuation of volume discount scheme, extension of RORO package, which is being experimented at Konkan Railways, special lump sum rate for merry go round routes and offering of goods sheds to develop warehousing, extensive use of IT & Telecommunications to improve passenger services and amenities.

The CII president also appreciated the specific efforts taken by ministry to promote rail tourism this year and the thrust given to the completion of the on going projects.

CII also hailed the setting up of the Advisory Committee for initiating ways and means to modernise Indian Railways and particularly on higher allocation of Rs 30 billion on safety related work.

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