Passenger fares, freight rates unchanged, West Bengal gets bonanza.

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Railway Minister Mamata Banerjee left freight rates and passenger fares untouched, announced steps to improve passenger amenities and upgrade rail infrastructure with help from the private sector, unveiled a raft of initiatives like a dozen non-stop, superfast long-distance trains christened duranto and lavished new services and two new projects on her home state of West Bengal.

She did, however, little to stem the rot in Railway finances.

Numbers tucked away in the Railway Budget documents show the efficiency of the Indian Railways will worsen and it will have far less investible surplus in its hands in 2009-10. In fact, these numbers show a sharp deterioration between February, when Lalu Prasad had presented the Interim Railway Budget, and now.
 

The operating ratio (working expenses as a portion of traffic receipts), Prasad had said, would fall from 88.3 in 2008-09 to 89.9 in 2009-10. Banerjee said it would actually be 92.5.

Banerjee also announced a significantly reduced cash surplus after dividend — which indicate resources available for investment — at Rs 8,722 crore. Prasad had projected the cash surplus at Rs 13,542 crore for the year, down from Rs 14,609 crore in 2008-09.

There was, as expected, incessant banter between Banerjee and Prasad throughout Banerjee’s speech.

Dressed in her trademark white cotton sari and rubber slippers, the firebrand Trinamool Congress leader dwelt at length on softer issues like catering, cleanliness and medical services in her speech. But the fine print showed she has cut appropriation to the depreciation fund by 23.9 per cent to Rs 5,325 crore and to the capital fund by over 88 per cent to Rs 642 crore. In other words, there isn’t enough provisioning for wear and tear of equipment and investments in the current financial year. However, she has raised the outlay for rolling stock (locomotives, wagons, carriages etc) 9 per cent, to Rs 12,393 crore.

The Plan outlay for the year is Rs 40,745 crore, up from Rs 36,336 crore in 2008-09. Budgetary support has been raised by Rs 5,000 crore from Rs 10,800 crore in the Interim Budget. The Railways will mobilise another Rs 15,675 crore from internal resources and will borrow Rs 9,170 crore from the market. The finance ministry has approved the issue of tax-free bonds by Indian Railway Finance Corporation.

Banerjee, who delivered her speech in English, with a smattering of Hindi and Bengali, rolled back Prasad’s freight and passenger earnings projections for the year by 0.9 per cent and 2.7 per cent, respectively, though her numbers are still higher than the estimates for 2008-09 (see table). She has also optimistically upped the freight tonnage target for 2009-10 by almost 6 per cent to 882 million tonnes, though growth was 5 per cent in 2008-09 to 833 million tonnes.

Banerjee, who said she did not have enough time to please all in the one month she had to prepare the Railway Budget, has done little to tackle the issue of burgeoning salaries and pensions paid by the Indian Railways. Together, the two now account for well over a third — 36 per cent — of the Railways’ expenditure (25 per cent for salaries and 11 per cent for pensions.)

This was Banerjee’s third Rail Budget and the first as an ally of the Congress. She presented two Railway budgets as the National Democratic Alliance’s railway minister.

In her speech today, Banerjee outlined an ambitious programme to upgrade stations and utilise of vacant land through private-public partnership. There were promises to improve ticket availability, doctors in long-distance trains, improved security including a commando force, premium services for container movement and cold storages for farm produce. Dedicated freight corridors were renamed Diamond Rail Corridors. Sam Pitroda has been summoned to advise on the optic fibre network.

Private ownership of wagons and carriages and operation of freight terminals will be encouraged. A new monthly ticket of Rs 25 for the poor was proposed under a scheme called Izzat (respect).

Infamous for having hurled her shawl in 1997 at Ram Vilas Paswan, then Railway minister, for ignoring West Bengal, Banerjee awarded a coach factory and a 1,000 Mw power plant to the state, apart from a string of new train services. West Bengal goes to the polls next year. The Communist Party of India (Marxist), which has ruled the state for over 30 years now, lost votes in the recent general elections as well as local elections. Banerjee, obviously, wants to press home the advantage.

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