Reform Express rolls, rail budget links fares, freight rates to the price of fuel

Rail budget

Grappling with limited resources, Railway Minister Pawan Kumar Bansal chose to play it safe in his maiden rail budget Tuesday, avoiding announcing over-ambitious projects and trains, and at the same time refraining from increasing passenger fares as the government faces polls in 2014.

Instead, in a major reform move, Bansal for the first time linked railway fares and freight rates to fluctuating prices of fuel-diesel and electricity.

Starting April 1, freight rates will see a jump of a little more than 5 per cent over existing rates due to the imposition of a fuel adjustment component. The next time diesel prices are raised for bulk consumers such as the railways, passenger fares will be impacted too.

This revision will be carried out every six months and Bansal said this could see rates fall as well if fuel prices decrease.

By announcing just seven new factories and just about 100 new trains, including 67 long-distance mail/express trains, Bansal presented a stripped-down budget that, unlike his predecessors, stressed on reform more than political ambition.

Prime Minister Manmohan Singh called it a "reformist and forward-looking" budget, one that "presents a realistic picture of railway finances".

Finance Minister P Chidambaram termed it as "practical and implementable", and said that Bansal had presented the finances of the railways in a very candid manner.

Quoting Kautilya in his budget, Bansal said, "All undertakings depend upon finance. Hence foremost attention shall be paid to the treasury." Going with that spirit, Bansal projected a modest plan outlay of Rs 63,363 crore for the next fiscal. Although it is the highest ever for the railways, it is only a couple of thousand crore rupees more than last rail budget.

Similarly, while the operating ratio money spent to earn every 100 rupees; which is lower the better has improved to 88.8 per cent, the target for next year has been kept at a modest 87 per cent.

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