Rail Budget: Fares hiked after 9 yrs; focus on safety, fiscal prudence

Dinesh Trivedi, presenting his first rail budget, had his task cut out. His focus, he said, was three-pronged: "Safety, safety, safety."  Following very closely behind were consolidation, decongestion and modernization.
 
So aided by poetry, quotable quotes and many mentions of his party chief and predecessor Mamata Banerjee, the railway minister today proposed the first hike in passenger fares in nine years and the highest ever annual plan outlay for the railways at Rs 60,100 crore, of which Rs 15,000 crore he said, would be from market borrowing.
 
The passenger fare hike is a bold step. The rail minister has proposed a 30 paisa per km hike for AC first class travel, a 15 paisa per km hike for AC second tier and a 10 paisa per km hike for AC third tier. Platform tickets would now cost Rs 5. 

"The proposal to rationalize the fares will cause minimum impact on the common man," the minister said. Passenger fares are likely to add Rs 36,073 crore to the railway's revenue in the next fiscal.

The hike in fares snaps a populist trend to help mend the finances of a creaking network that is a bottleneck for growth in Asia's third-largest economy. The refusal by successive ministers to raise fares has strained the ministry's finances, which in turn has sapped the amount of money available to lay new track and modernise services.

Clogged freight lines, slow delivery times and overcrowded ports have dented Indian companies' competitiveness and slowed the pace at which crucial commodities such as coal are transported -- aggravating India's power shortages.

"Indian railways are passing through a difficult phase," Railway Minister Dinesh Trivedi told parliament.

"If we do not strengthen Indian railways, I'm afraid we weaken our country," he added, in a speech that was littered with poetry and occasionally interrupted by jeers and laughter.

Mr Trivedi’s big emphasis will be on safety. This would include setting up an independent Railway safety authority and phasing out level crossings in five years among other initiatives.  

Time now, said the minister, for a national policy on railways, as he sought big financial support from the government for the world’s second largest railway network. The minister says he needs to modernize 19000 km of rail tracks; also new tracks are needed, he says, in tribal areas and backward regions of the country need to be connected. The bill for this will be an estimated Rs 6,467 crore.

The minister said that 725 km of new lines will be completed in this year and proposed 700 km of new line to be built in 2012-13. 100 stations via the public-private partnership route have been planned over the next 5-years, he added.

The minister announced the introduction of 75 new express trains and 21 new passenger trains. The introduction of Guru Parikarma train covering Amritsar, Patna and Nanded was also announced.

Addressing the key issue of rising operating ratio, Mr Trivedi proposed to bring down the operating ratio from 95% currently to 84.9% in 2012-13. Operating ratio is the amount of money spent for every rupee earned and it has been rising to alarming levels.

Subsidies vs investment debate:

Successive railway ministers have belonged to powerful regional allies of the ruling party in New Delhi, who have tended to subsidise passenger fares at the expense of freight traffic, making goods transport expensive and slow.

Earlier this month, the government raised rail freight rates by nearly 20 percent.

India's railway network is one of the world's largest, but years of low investment and populist policies have crimped growth and hindered private investment in a sector seen as crucial to the country's economic expansion.

"We need to have a system that delivers," Trivedi said.

From 1990 to 2007, which parallels India's economic rise, the country built 960 km of tracks compared with China's 20,000 km over the same period.


 

Rail Budget at a glance:

Passenger fares:

*Passenger fares to be hiked by 2 paise per km for suburban and ordinary second class travel; 3 paise per km for mail/ express second class; 5 paise per km for sleeper class; 10 paise per km for AC chair car/AC 3-tier and First Class; 15 paise per km for AC 2-tier and 30 paise per km for AC 1-tier.
*Minimum fare and platform tickets to cost Rs 5.

Amenities:

* The open discharge toilets on trains to be replaced with green (bio) toilets.
*Steps to improve cleanliness and hygiene on trains and stations within six months. A special housekeeping body will be set up to take care of both stations and trains.
*New passenger services include escalators at major stations; alternative train accommodation for wait-listed passengers, laundry services, AC lounges, coin/currency operated ticket vending machines.
*On board passenger displays indicating next halt station and expected arrival time to be introduced.
*Introduction of regional cuisine; Book-a-meal scheme to provide meals through SMS or email.
*Specially designed coaches for differently-abled persons to be provided in each Mail/Express trains.
*Wellness programme for railway staff at work places.
*Institution of Rail Khel Ratna Award for 10 rail sports-persons every year.

New trains:

*75 mew Express trains to be introduced, along with 21 new passenger services, nine DEMU services and 8 MEMU services trains.
*Route of 39 trains to be extended and frequency of 23 trains to be increased.

Hiring:

*Railways to hire more than one lakh employees in 2012-13; 80,000 persons hired last year.

Infrastructure:

*Indian Railways Stations Development Corp to be set up to re-develop stations and maintain them like airports.
*To provide rail connectivity to neighbouring countries, a new line from Agartala to Akura in Bangladesh to be set up.
*Double-decker container trains to be introduced.
*National High Speed Rail Authority to be set-up; Pre-feasibility studies on six high speed corridors completed; study on Delhi-Jaipur-Ajmer-Jodhpur to be taken up in 2012-13.
*A wagon factory at Sitapali, Odisha, rail coach factory at Palakkad, two additional new coach manufacturing units in Kutch (Gujarat) and Kolar (Karnataka); component factory at Shyamnagar (West Bengal); new coaching terminal at Naihati, the birth place of Bankim Chandra Chattopadhyay.

Safety:


*To set up an independent Railway Safety Authority as a statutory body.
*All unmanned level crossings to be abolished in next five years; to target zero deaths due to rail accidents.
*Two new members, one for marketing, and other for safety, to be inducted into Railway Board.

Financials:

*Railway Tariff Regulatory Authority to be considered.
*Freight loading of 1,025 MT targeted; 55 MT more than 2011-12; Passenger growth targeted at 5.4 per cent.
*Passenger earnings to increase to Rs 36,200 crore.
*Gross rail traffic targeted to increase by Rs 28,635 crore to Rs 1,32,552 crore in 2012-13.