Cash-Strapped Railways Need Rs 50,000cr To Fund Expansion

The rise is unavoidable as the railways has to contend with a tight resource position. The railways share in the total plan outlay has fallen to 5.9-6.9 per cent, according to the India Development Report, 1997. In the coming years the railways may have to rely more on resources generated internally. Altern-atively, it may have to tap the market.

However, both these options have limits. The railways therefore may have to raise freight rates and passenger fare by 20-25 per cent every year till the year 2000, as it has to raise Rs 50,000 crore to finance capacity expansion.

The rise in freight rates would mean higher cost of production for certain industries that may raise prices of their final products. There may be a rise in prices of coal, steel, pig iron, cement, foodgrain, fertilisers and petroleum products which account for over 90 per cent of the goods traffic. This will affect the overall price situation. Coal alone accounts for 46.5 per cent of the total freight traffic earning of the railways, followed by raw material for steel plants and cement (9 per cent), foodgrain and petroleum products (7 per cent) and fertilisers (5.6 per cent).

 

More private participation has been suggested to improve the functioning. The railways had earlier identified 40 projects worth Rs 4,390 crore for the private sector under a build-own-lease-transfer scheme. Subsequently 13 projects worth Rs 951 crore were added to the list. Two projects Viramgam-Mehsana gauge conversion (Rs 60 crore) and Mudkhed-Adilabad gauge conversion (Rs 160 crore) have been allotted to Hydron Enviro System, Ahmedabad, and Shakthi Concrete Industries, Hyderabad, respectively.

The railways has also come up with a new marketing strategy that includes aspects like door-to door service to own your wagon scheme.

The central plan has set aside Rs 6,861 crore as internal and extra budgetary resources for the railways in 1996-97, according to budgetary estimates (BE). The revised estimates (RE) for 1995-96 show a rise of 10.6 per cent to Rs 6,350 crore (Rs 5739 crore in the previous year). In 1995-96, the budgetary support was Rs 1,150 crore (RE) and the budget estimate for 1996-97 is expected to be Rs 1,269 crore, a rise of 10.3 per cent.

Market borrowings by the railways were expected to rise from Rs 856 crore in 1994-95 to Rs 2,250 crore (BE), but were only Rs 1,927 crore in 1995-96 (RE). The 1996-97 (BE) puts the figure at Rs 1,850 crore. Internal resources show a moderate rise of 23.6 per cent from Rs 3577.4 crore in 1994-95 to Rs 4,423 crore in 1995-96 (RE). In 1996-97 it is expected to be Rs 4,111 crore.

The fuel bill has been rising. Fuel accounts for nearly 14 per cent of the total expenditure of the railways. However, the government has to strike a balance between freight rates and passenger fare.

The United Front government has planned a few development projects with long gestation periods to tone up operational efficiency.

The surplus generated by the railways after meeting its total working expenses and allowing for depreciation reserve fund, pension fund and dividend liability was Rs 1,806 crore in 1993-94. It fell by 5.2 per cent to Rs 2,318 crore (Rs 2,446.4 crore in the previous year) in 1995-96 (RE). However nearly 119 branch lines incurred a loss of Rs 166 crore in 1994-95. In 1993-94, the mail express passenger service trains suffered a loss of Rs 109 crore and ordinary passenger services Rs 1,164 crore. The losses may have gone up in subsequent years.

Gross tariff receipts grew by 10-12 per cent between 1993-94 and 1996-97. The budget estimates for 1996-97 place gross tariff receipts at Rs 24,800 crore (Rs 22,175 crore).

However, the increase in traffic receipts has been neutralised by a 9.6 per cent rise in working expenses to Rs 16,590 crore (Rs 15,134 crore) in 1994-95 and a 15.1 per cent rise in 1996-97 to Rs 21,573 crore (Rs 18,740 crore BE ). The operating ratio increased from 82.9 per cent in 1993-94 to 86.2 per cent in 1995-96 (RE). It is expected to rise to 87.8 per cent in 1996-97 (BE).

The railways needs to cut expenditure and increase operational efficiency. Unfortunately the first casualty of economy measures is expenditure on developmental of new lines. The share of new line expenditure to total development expenditure fell from 4.5 per cent in 1994-95 to 2.7 per cent in 1996-97 (BE). New line projects are taken on the basis of criteria suggested by the National Transport Policy Committee (1990). Projects with a cost of less than Rs 50 crore are approved by the Planning Commission before they are included in the railway budget.

There are 7,056 railway stations in the country connected by 62,660 km of railway lines, of which 39,612 km is broad gauge, including 14,995 km of double lines. Nearly 13,035 km of railway lines in the country is electrified. There are 6,908 locomotives and 291,360 wagons.

The shortage of track capacities adds to the overworked railstock. As a result, deliveries are delayed. This erodes the railways competitiveness in comparison to road transport.