THE RAILWAY Budget for 2011-12 has been on the predictable lines and as expected, is people-friendly. It contains announcements for setting up of a number of factories for manufacture of coaches, track machines, wagons, bridge components apart from a software unit in Darjeeling as also a factory in Jammu and Kashmir. The

fares remain untouched and there have been no major changes in freight. A new AC class is proposed to be introduced. There have been no significant announcements on the concession front, except for the one relating to senior citizens and another for press correspondents. An additional 68 trains are proposed to be introduced, including nine Durontos and three Shatabdis. The operating ratio is expected to come down marginally from 92.1 per cent to 91.1 per cent in the financial year 2011-12. The Annual Plan Outlay of `57,634 crores, the highest ever, with a gross budgetary support of `20,000 crores, is indeed sizeable.
In light of the unsatisfactory financial position of the Railways and apprehensions about the economic growth in the coming year, more concrete measures to bring in a turnaround were expected. In the last Budget a mention was made about the need to plan for the coming years to achieve the goals of “Vision 2020”. Since fares have remained untouched for eight years and the input costs have steadily gone up, some upward revision of passenger fares was called for. Successive increases in the price of petroleum products and other post budgetary factors have had their impact to the extent of `5,700 crores, the Budget notes. The social service obligations has gone up from `11,478 crores in 2008-09 to `13,675 crores in 2009-10. The non-revision of passenger fares, coupled with reduction in booking charges and the concessions granted, will have their impact in the balancesheet of the Railways.
The projected freight earnings for the current year at `62,489 crores, while reducing the physical target by 20 million tonne, from 944 to 924 million tonnes, are likely to materialise only if the commodity-mix and lead undergo a change, not to mention any freight adjustments during peak season. Similarly, the projected loading of 994 million tonnes for the next year implying an incremental loading of 70 million tonnes calls for several innovations and initiatives if we go by the current year’s likely achievement of 54 million tonnes. In the absence of any specific measures finding a place in the Budget, much depends on substantial economic growth and resultant movement of commodities both traditional bulk and other commodities. The Railways’ various schemes which have been announced in the last two Budgets, such as Wagon Leasing Scheme, Special Freight Train Operation, Automobile Freight Trains, setting up of Automobile and ancillary hubs etc., must also take off to the advantage of the Indian Railways. The latest policy announcement for investment in rail connectivity for coal and iron ore mines should also be considered a plus factor in this regard. The Budget, while realising the need for making a turnaround, believes this would come about in the normal course. It would have been desirable to put in place proactive result-oriented steps to meet this objective. To that extent, the Budget doesn’t meet a financial analyst’s expectations.
(The author is former financial commissioner, Indian Railways)
By arrangement with Financial Chronicle