Hike in oil prices not to hurt railways

The recent petroleum price hike would not significantly affect Indian Railways' financial condition, Vijayalakshmi Viswanathan, finance commissioner (railways) said here today.

"For every one rupee increase in diesel price, the railways have to incur an additional cost burden of Rs 210 crore every year. Therefore, the Rs 245-250 crore additional cost that the Indian Railways might need to incur of in the remaining seven months of the current financial year, is not significant when compared with the Railway's total budget of Rs 40,000 crore," said Viswanathan on the sidelines of a seminar on "Freight Mission for Indian Railways-Issues & Challenges" organised by the Indian Railway Accounts Service (IRAS), eastern region.

She said the Railways have no plans of increasing the freight rate. The Railways carried 211 million tonnes (mt) of freight during the first four months of the current financial year, 20 mt more than freight carried from April-July 2004-05.

"We will comfortably carry 670 mt of freight in 2005-06, 35 mt more than the budget estimate for the year. Performance in the first four months was extremely good and we are working harder to reach 700 mt by 2006-07, if not within this financial year," she added.

In 2004-05, the Railways carried 602 mt freight, 45 mt more than previous year's figure of 557 mt, she noted.

"We are working on framing a 'corporate plan' for 2020. This will address all our targets for passenger and freight load, operational ratio and other relevant parameters. The plan is expected to be ready within a month," she said.

The Indian Railways plans to reduce its operating ratio from the present 90.8 per cent to 85 per cent within the next five years, she said.

The Railways has appointed Rail India Technical and Economic Services (Rites) to conduct a study to find out the amount required to be put under depreciation reserve fund (DRF) for replacement and renewal of rolling stock.

"There is a perception that the amount allotted under DRF for replacement and renewal of rolling stocks is significantly low. But it is primarily done through market borrowing that includes a principal component also, and therefore it is not necessary to put it under DRF. Still the Railways has appointed Rites to conduct a study to figure out the amount that needs to be put under DRF for the purpose," she explained.

The report is expected to be complete by next month, she added. In 2004-05, Rs 3,604 crore was allotted to the DRF.