Setting the tone for an ‘Election Budget’, railway minister Lalu Prasad is likely to reduce both passenger fares and freight rates, riding a strong revenue growth and reduced operational costs. Rail fares are likely to be cut by 3% to 5% while freight rates for petroleum, steel and iron ore may come down by 4% to 5% due to reclassification of goods.
Since this will be the last full-fledged Railway Budget before the general elections, scheduled for next year, the railway minister is expected to go all out with populist measures, ministry sources said. According to officials at the Rail Bhawan, there will be no deviation from the trend of not hiking freight and passenger rates as the Railways is right on track to meet the twin objectives of reducing operational cost and increasing revenues. Between April 2007 and January 2008, earnings from freight and passenger traffic have grown 11% and 14%, respectively, giving enough cushion for Mr Lalu Prasad to cut rates.
The turnaround time of most trains has been reduced by using the same coaches in more than one sector. The strategy has helped the Railways increase profit without hiking passenger fares or freight rates. A possible cut in passenger fares is likely to cover all categories while short-distance travel charges may see some rationalisation, the sources said.
As in the past three years, the Railways would persist with freight rationalisation to bring down tariffs on steel, cement and petroleum products. “The downward revision in freight rates will happen due to a reduction in the freight determination classes from 210 to 200,” a railway ministry official said.
The railway minister had last year indicated the Rail Budget would be for the aam janata (common man).
He had pointed out that despite the reduction in passenger fares, the railways had earned a profit of Rs 20,000 crore last year by increasing business volumes.
Every year, the Railways go in for freight rationalisation to offer respite to consumers from inflationary pressure. In the 2007 Railway Budget, freight rates for petrol and diesel were brought down by 6%. A proposed cut in freight rates will not result in a revenue loss as the Railways plays the volume game successfully, as in the past.
The focus this year will be to bring down freight rates for heavier commodities such as steel, iron ore and other petroleum products, which are facing pressure from rising costs. For lighter commodities, the Railways has already rejigged the structure by introducing low-rate tariff lines below the lowest freight class comprising 100 commodities.
Rationalisation of freight rates has contributed enormously in Railways’ turnaround. Its total earnings during April 2007 to January 2008 was Rs 57,282 crore compared with Rs 50,765.25 crore during the same period last fiscal, a growth of 12%. The Railways generated Rs 38,748-crore revenues from freight traffic during the period, an 11% year-on-year growth. During the first 10 months of the current fiscal, freight traffic volumes stood at 643 million tonnes, compared with last year’s 593 million tonnes. Earnings from passenger fares were at Rs 16,134 crore (Rs 14,126 crore).
Last year’s Railway Budget had reduced fares for AC-I by 6% in the lean season and 3% in the peak season. Fares in popular trains were lowered uniformly throughout the year by 3%. Peak season AC two-tier fares were reduced by 2% while lean season fares fell 4%. In popular trains, fares were cut across the board by 2%.credits : TOI
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