The Telegraph
Tuesday , February 26 , 2013
Since 1st March, 1999
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Bansal walks a tightrope

New Delhi, Feb. 25: Rail minister Pawan Kumar Bansal will have to do a fine balancing act in his maiden budget tomorrow — he needs to juggle with the demands for populist proposals keeping in mind next year’s Lok Sabha elections and measures to increase revenues.

The road before Bansal is all the more arduous following a steep hike in diesel prices for bulk users and expectations of an inadequate budgetary support from the central government, which is finding it difficult to put its fiscal house in order.

Bansal’s action plan is indeed daunting: he will have to chart the course for the railways to meet their working expenses, reduce operating ratio, save for development and safety, and provide better amenities to passengers.

On the stock exchanges today, share prices of wagon makers and railway order suppliers such as Titagarh Wagons, BEML, Kalindi Rail Nirman and Stone India took a hit on news of a likely reduction in wagon orders.

Bansal had engineered a passenger fare hike on January 21 in the midst of the railways facing a loss of about Rs 25,000 crore in the segment. The railways had aimed to mop up an additional revenue of Rs 6,600 crore through the price hike.

However, the deregulation of diesel price for bulk users wiped out Rs 3,300 crore.

The budget tomorrow may not introduce a direct increase in passenger fares, but fuel adjustment charges and other surcharges may be levied on special trains such as the Rajdhani and Shatabdi as well as on AC class passengers. A hike in the charges of services such as tatkal is also on the cards.

A fare hike through a cess — ranging from Rs 3 to Rs 50 per passenger — could help the railways raise Rs 5,000 crore for safety works every year, a rail panel headed by former Atomic Energy Commission chairman Anil Kakodkar had said.

Bansal may tweak freight rates despite resistance from industry but may announce freight schemes to attract more loadings.

The railways are likely to miss the revenue target of Rs 1.35 lakh crore for this fiscal as the total earning for the 10 months from April 2012 has been Rs 1,01,223 crore, about Rs 34,000 crore below the target.

Indian Railways had set its operating ratio at 84.9 per cent in the last budget. At present, the operating ratio is hovering between 88 per cent and 90 per cent.

The operating ratio for the railways — which is its operational expenses as a percentage of revenues — has risen from Rs 91 in 2004-05 to Rs 95 in 2011-12.

The railways is also set to miss its freight earning target of Rs 89,339 crore this fiscal as total goods earnings for the last 10 months were only Rs 70,067 crore.

Even the freight loading target of 1,025 million tonnes (mt) is likely to fall short by 15 mt.