The Telegraph
Since 1st March, 1999
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Nitish gambles on twin hopes

New Delhi, Feb. 26: Railway minister Nitish Kumarís budget is banking heavily on lowering freight rates and passenger fares to bring travellers and goods back into the trains.

Nitish hopes that his double bonanza will yield a 7 per cent growth in earnings at Rs 43,495 crore. Freight rates have been slashed as the railways were losing their share to road transporters. Some of the innovative schemes such as a 50 per cent concession on short routes introduced to woo goods traffic is already reported to have been experimented successfully and will now be introduced on a wider scale.

However, factors such as the fast pace of development of the road sector under the Prime Minister's national highway development programme and the door-step to door-step delivery that the truckers can assure pose a formidable challenge.

While the railways have always been aware that successive increases in freight rates were driving away traffic, this is the first time that they have taken a bold initiative to reverse the process. In practice, the efficiency with which they execute their plans will determine the extent to which they succeed in weaning away traffic from the road sector.

The loss in the share of the lucrative petroleum oil and lubricants (POL) traffic to the modern pipeline network has come as a bolt from the blue for the railways. Traditionally, POL traffic has been the highest earner for the railways, contributing as much as 13 per cent to the total earnings. This has now fallen to around 10 per cent. While the railways earned Rs 2,613 crore in 2001-02 from the movement of these goods the figure fell to Rs 2,678 crore in 2002-03.

Since the oil companies consider pipelines a more reliable and cost-effective mode for transporting petro-goods, they are not likely to give up this mode and opt for the railways. The Mangalore-Bangalore pipeline, which will be completed soon, will result in a further loss of 1.5 million tonnes of POL traffic.

Despite the brave talk of wooing the oil companies with attractive packages, the budget has lowered the earnings from petro-goods to Rs 2,436 crore for 2003-04. The quantity of these goods that the railways expect to carry has also been reduced from 34.5 million tonnes to 33 million tonnes. This is a clear recognition of the fact that the railways are fighting a losing battle on this front.

Sources disclose that Kumar is expected to take up the petro goods issue at the highest level óreviving the oil pipeline-versus-railways debate in the country.

The budget has proposed a plan outlay Rs 10,607 crore and another Rs 2,311 crore for safety-related works through the special railway safety fund. The national exchequer will contribute Rs 6,577 crore, which represents a Rs 737-crore increase over the corresponding figure of the previous year. The internal generation of resources for the plan will be around Rs 2,630 crore, while Rs 3,000 crore will come from market borrowings. The latter will entail a higher debt burden.

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