With marginal cuts in freight and passenger fares and with a cash profit of Rs.250 billion for this fiscal, Railways Minister Lalu Prasad presented his fifth budget Tuesday, adding another chapter to the dramatic turnaround story of the Indian Railways.
Springing a surprise on 14 million passengers who travel by Indian trains every day, Lalu Prasad said that fares would be cut by five percent in sleeper class, four percent in AC II Class, three percent in AC III Tier and seven percent in AC I Class. Transportation of fuels would also cost five percent less.
The minister also announced in the Lok Sabha 10 new 'garib raths' and 53 other new trains for the next fiscal. He said that for the first time tickets would have the expected time of arrival of trains to ensure punctuality.
"Everybody is appreciating that I have done tremendous work," Lalu Prasad, who was dressed in a cream-coloured sleeveless sweater and his trademark white kurta pyjama, said in English before proceeding with the 115-minute speech in Hindi.
"We have created an organisation where every child will say Chak de Railways!" said Lalu Prasad in his last full budget for the United Progressive Alliance (UPA) government, with an eye clearly on elections in several states and the later Lok Sabha ballot.
The Indian Railways run more than 11,000 trains every day, 7,000 of which are for passengers. The network comprises 108,706 km and ferries the 14 million passengers from 6,853 stations across the length and breadth of the country.
Given its importance, this is also the only ministry that has a separate annual statement of accounts outside the national budget, which will be presented by Finance Minister P. Chidambaram Friday.
As he read out the budget proposals, Lalu Prasad said the private sector would be permitted to build terminals on land owned by the railways. Consultations will begin with foreign companies to design new wagons.
Some of the measures directed at the average citizen included tickets through mobile phones, issuance of wait-listed e-tickets, 6,000 ticketing machines by 2009, LED display boards at stations and higher platforms at 135 stations.
He also announced modular toilets in trains, modernised coaches for some premier trains like Rajdhanis and Shatabdis, touch screens and colour TVs at all major stations and stainless-steel coaches for all trains by 2010.
The minister said that in the past four years, the plan investment in railways had almost tripled to Rs.300 billion from Rs.110 million even as the freight target of 785 million tonnes was surpassed this fiscal with 790 million tonnes.
He also said that revenues from passenger fares had jumped by 14 percent, while income from freight loading was up close to 10 percent at Rs.347 billion in the first nine months of the current fiscal.
This apart, the minister said the rail infrastructure would be upgraded over the next seven years at an investment of Rs.750 billion along with the proposal to set up 20,000 km of high-density network for speedier trains.
The minister began his speech, seeking to assuage feelings of some members from Karnataka who took offence to reported comments made by him that they said was offensive to their state.
"I have already clarified my position. Remember, I had made a prime minister from Karnataka," the minister said amid laughter, referring to the support he gave to H.D. Deve Gowda in forming a government.
As he came to the end of Part One of his speech after some 110 minutes, there were noisy protests by opposition members. But Lalu Prasad persisted in reading the report even though Speaker Somnath Chatterjee asked him to table it.
"If leaders of parties behave this way, I cannot understand," an anguished Chatterjee said. "Those who don't want to listen, may go out."
Indo-Asian News Service
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
In their pre budget memorandum to the Ministry of Railways, Assocham has mooted suggestions that can help step up savings by nearly Rs234 lakh per train p.a
Industry chamber Assocham has mooted a proposal for introduction of End on Generation (EOG) system initially in about 1500 trains in a bid to make railways more efficient in energy savings and to increase their speed. This will enable the railways to save Rs234 lakh per train annually and usher in a second phase of modernization.
In its pre-railway budget memorandum submitted to Ministry of Railways, Assocham president, Venugopal N. Dhoot said that railways currently use self generation system in a number of trains, which need to be replaced with efficient EOG systems.
End on Generation (EOG) is the system used on fully air conditioned Rajdhani and Shatabdi trains. The system comprises two power cars per train. Each power car has two DG sets and each DG set is rated at 300 kW. These are mounted inside the power car or the entire power car coach which is dedicated for these power plants. The power generated by these DG sets is utilized for hotel load of the train.
EOG concept to step up energy efficiency
According to estimates EOG concepts bring in multiple advantages to railways and release hauling capacity of locomotives while saving energy efficiency by over 90%.
Economic benefits for railways on a conservative estimate with introduction of EOG system can be savings in capital investments with building new trains to the tune of Rs93 lakh per train. Recurring returns in energy savings due to increased operational efficiency can be to the tune of Rs130 lakh per train per annum. Reduction of over all rate of the train can bring in savings of Rs11 lakh per train per annum.
Release of traction hauled loads can improve average speed of coaches. There will be no infringement in revenue earning space of SLR coach as DG sets will be mounted under the coach. Indian railways runs about 1500 passenger trains and if this gets applied to all trains, returns will be substantial.
Introduce lighter EOG system in all locomotive hauled mail/express trains
All mail/ express trains would work on the following lines: each SLR coach to be equipped with 1 unit of underslung diesel generator set. Each DG set will be rated between 300 KW to 400 KW depending on the need.
EOG concept will eliminate axle mounted generator and corresponding battery bank and inverter on each coach and replace it with one unit of DG set under the SLR. A 100% back up in the form of second DG set will be used on the second SLR of the train.
SG coaches need an axle mounted generator (1x4.5 kw per standard coach and 2x25 kw per AC coach), corresponding batteries, inverters, pulley, belts, regulator and battery box. The energy to turn the axle mounted generator comes from locomotive. The conversion ratio of usable hotel load to locomotive energy is approximately 1:2. I.E., the system has an efficiency of 50%. This is a huge and recurring wastage and is used on all conventional mail, express and passenger trains. credits: mint
What Probir Ghose wrote on sulekha blog about Indian Railway Budget 2008
The time for the Railway Budget 2008 is fast approaching – by this time next week we would be more knowledgeable on what Laloo-ji has finally given to the commoner. Normally, promises are made left right and centre but very few of these translate into positive action and visible results within the given time frame. He has not increased the train fare as such but there have been discreet increases that add up to substantial amounts given the crores of passengers that travel on the Indian railways. That is neither here nor there – he has to run the establishment and commoners have to bear with him and his railway board members who dream up those wonderful projects. Introduction of Cyber cafés on the railway platforms, providing mobile phone charging points in the train compartments, serving of international brand snacks in the trains, and redesigning the sleeper coaches so that the passengers can maneuver their luggage more easily etcetera are done in keeping with the basic philosophy of stepping ahead with the times. These are in line with the e-ticketing concept.
However, when one comes to discussions on other matters where the Railways need to be more serious are the miserable condition of the toilets in the reserved compartments – these depict the sad state of affairs. Agreed that a majority of people love the open air surroundings during their mandatory morning outings to empty the internal wastes, there is no justification of the dirty and filthy surroundings inside the compartments. The water taps, the wash basins, the mirror and the door locking mechanism are such that these result in avoidance by the travelers. Added to these are the crowds of unreserved persons who occupy the space in front of and around the toilets. The situation is similar in the ordinary sleeper as well as the air conditioned sleeper coaches. And, in order to keep the compartments clean and do regular sweeping, the railways encourage the urchins who keep coming one after another – armed with brooms , these kids are in many cases handicapped – if this is a method of the railways to do their bit for the handicapped, they deserve to be congratulated. That is not usually the case – the children owe their allegiance to other masters who control them from outside. There is no love lost between them – the kids have to count out their earnings to the bosses who hand out the appropriate doles at the end of the day. These might be in cash or in kind – kind is the favored option: especially for the girl kids.
Quite recently, the Railway Minister had taken to task some officers who had not lived upto his expectations down South and had not served him proper food – however, the quality of food that one has become accustomed in the trains is pathetic. The helpless passengers have to grin and bear it all. Due to the large volume of passengers, the catering staff have to cope with tremendous rush – hence, the personal touch that used to be there during the 60s has vanished. Today, they all talk business – the staff has their tasks cut-out: the new recruits move around with the thermos that contains hot white water – the whiteness is courtesy milk. This universal concoction for hot drinks is accompanied with tea bags of unknown brands and a bottle of coffee powder. Depending on the choice of the customer, the outputs of the two main hot drunks of the Indian public are served. Come meal times, the orders are taken several hours in advance and served at times that one does not normally associate with either lunch or dinner.
Then are the Supermen of the Railways better known as the TTEs (Travelling Ticket Examiners). Inside the compartment, they are supreme and are supposed to ensure many important things that must be written down somewhere but that is seldom followed in practice. One presumes that the TTEs should look into the comfort of the passengers who dish out extra money for getting firm reservations. However, the reserved compartments are invariably the place where short distance travelers hop in and squeeze themselves in between the tired travelers. ‘I will go only upto the next stop,’ he pleads – the ‘next stop’ in long distance trains might very well be four hours away! Those who possess valid reservations are, therefore, put to a lot of inconvenience due to the attitude of TTEs who never try to prevent such intrusions. Obviously, the argument gains ground that the TTEs earn money on the sly by permitting such irregularities.
While giving the finishing touches to the 2008 budget proposals, the Railway Minister should spare a thought for its customers and consider methods to eliminate irritants that passengers have to face in their journeys. When one reserves a berth for a long distance journey, he has certain expectations – the railways should reciprocate by making the journey as pleasant as possible for the traveler so that the expectations are fulfilled.
It's a turnaround story that has not only amazed management experts but also caught the attention of premier global business schools like Harvard and Wharton - the dramatic return to profitability for the 154-year-old Indian Railways, among the world's largest railroad networks.
In February, when Railway Minister Lalu Prasad presented India's railway budget for the 2007-08 fiscal, its most striking aspect was the Rs.215 billion ($4.5 billion) surplus he announced for the organisation that employs 1.5 million people and boasts a 63,332-kilometer network that ferries 14 million passengers daily in 9,000 trains (4,000 more for cargo) from 6,947 stations.
"The railways are poised to create history," exulted Lalu Prasad, one of India's most colourful politicians, during his 116-minute speech, referring to the highest-ever surplus - akin to profits for companies - which the Indian Railways was projected to post for the fiscal year ended March 31.
"This is the same railway that defaulted on the payment of dividend and whose fund balances had dipped to Rs.3.59 billion ($80 million) in 2001," said the minister to the amazement of industry honchos and experts who were listening attentively to the speech.
In fact, he not only said that the surplus would increase next fiscal but also belied speculation over freight and upper class fare hikes that had once been a regular feature for the railways to bridge deficits. In fact, he even announced an across-the-board cut in tariffs and rolled out plans for 40 new trains, extended the run of 23 and increased the frequencies of 14 others.
All this only left experts gasping. They wondered what had caused such a sharp turnaround in the organisation from being the backbone of the Indian economy to being termed a "white elephant" headed towards bankruptcy by a government-appointed expert group.
"Today Indian Railways is on the verge of a financial crisis. To put it bluntly, the 'business as usual, low growth' will rapidly drive it to fatal bankruptcy, and in 16 years, the Government of India will be saddled with additional financial liability," said the report presented in July 2001.
This was, indeed, alarming for the Indian Railways, which since the commencement of its first journey on April 16, 1853, has come to reflect the pluralistic character of the country with many unique features such as having the world's largest as well as the smallest stations, the oldest running locomotive and a separate budget since 1924.
But from 2005, the signs of change were visible and became well entrenched by 2007. "The railways' renaissance has been engineered by simple entrepreneurial practices, which have evoked the admiration of internationally renowned institutions and companies alike," said a report by KPMG, which also conducted an international conference on railways in New Delhi last month.
"The railways are now working like a private sector corporation. This is great news for India. We wish other public services, especially in the social sector, like education and health would follow suit," Habil Khorakiwala, president of an apex industry group, the Federation of Indian Chambers of Commerce and Industry (Ficci), said.
"The turnaround is not hype because the net revenues have increased sharply," said Prof. G. Raghuram, who has thoroughly examined the performance of the Indian Railways as a case study for the premier Indian Institute of Management at Ahmedabad, one of India's best-known business schools.
"By increasing the axle-loading of wagons (which increases freight traffic) and, combining it with a market-oriented approach, Lalu Prasad has contributed to the success of Indian Railways," Raghuram added.
Lalu Prasad attributed the transformation almost entirely to improved efficiency that was even able to withstand increased competition from budget carriers that were offering to fly passengers for the cost of a second-class air-conditioned fare of the railways.
"Over the past 30 months, freight volumes have grown by 10 percent. Similarly, growth in passenger volumes has been doubled," he explained to a group of 130 students from Harvard and Wharton a few months ago, while delivering a lecture on the transformation of Indian Railways.
"On the supply side, increase in load coupled with reduction in turnaround time of wagons from seven to five days has contributed to an incremental loading capacity," the minister said in the rather simplistic explanation.
With financial parameters back on track, the Indian Railways now has set itself ambitious targets in areas such as refurbishment of stations, passenger amenities, better coaches and new freight corridors as it approaches the 11th Five Year Plan that begins April 1.
And says KPMG: "Indian Railways is in a dynamic phase of growth with new initiatives planned to capitalise on the existing gains and moving steadier and closer to the larger objective of offering world-class services in both freight and passenger transportation."
Indo-Asian News Service