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Hidden lash in Laloo largesse

New Delhi, Feb. 26: Laloo Prasad Yadav rolled out a second 'populist' railway budget in less than a year that came without fare and freight increases and yet managed to promise a surplus of Rs 1,975 crore for 2005-06.

However, just as Laloo Prasad seemed to have lost some of his magic touch in home state Bihar where results of a tense election will be known on Sunday, it appeared that in his eagerness to craft a pro-poor budget he had glossed over certain elements that would be seen as unpopular.

The cornerpiece of the budgetary exercise has been a rejig of the commodity classification categories, bringing them down from 27 to 19.

While the recast has lowered transportation costs for a range of goods from petrol and diesel to cars, textiles and tea, it raised the freight costs for rice and wheat (including foodgrain sold through ration shops), pulses, paddy and sugar ' all commodities of common consumption.

Most of the foodgrain ' especially that meant for ration shops ' uses the railways and the re-categorisation means that customers must brace for higher prices. Only if the grain is moved by open wagons will the railways charge the old freight rate.

Laloo Prasad, who was marshalling his cadre to fight what has been widely seen as a tough election in Bihar, might have had little time to go over the fine print of his budget. Result: his so-called populist budget may not be as popular as he might have expected.

One reason for this is that the freight tariff cuts have been sharpest for industries that barely use the railways to move their commodities: the rates for cars and motorbikes have been cut by as much as 61 per cent for distances of 1,500 km.

Most carmakers move a substantial portion of their production by roads ' and the railways are offering the cuts as an inducement to switch over.

Carmaker Hyundai Motor India president B.V.R. Subbu said: 'We only send our products by train to Delhi and this is a region where a drop in freight will be passed on.' Rival Maruti Udyog was more circumspect, saying it was assessing the impact.

Although LPG and kerosene freight rates have been lowered by 2.7 and 3.7 per cent respectively, there is little likelihood of a cut in prices as they are already heavily subsidised.

The railways are finally getting ready to stem the loss of earnings in the upper classes with passengers shifting to airlines, taking advantage of cheap Apex fares. Railway Board chairman R.K. Singh said the railways would introduce a frequent traveller scheme sometime in August.

The railway minister seems to have paid no heed to the suggestion of the Planning Commission and the finance ministry to not introduce new trains. He grandly announced 46 new trains.

The truth is that this is a bit of a chimera: the railways are still struggling to fulfil the promises of new trains made by Laloo Prasad's predecessors.

Waitlisted passengers will now get a virtual update on the ticket position and no longer have to wait for the list to be finalised four hours before the departure of trains. The upgrades stop now on the eve of departure.

Laloo Prasad also promised a peace express: special train daily between Amritsar and border outpost Attari.

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