The Railway Budget 2013-14; with the highest ever planned outlay of 63,363; portrays a very promising year ahead. Pawan Kumar Bansal, the Railway Minister in charge plans to facilitate faster and easier booking of e-tickets along with reservation status updates. With the help of a new website 1.2 lakh users will simultaneously be able to log on to IRCTC to book 7,200 tickets a minute. Free Wi-Fi connection will be made available in many trains, 67 new Express trains and 26 passenger trains to come up. Apart from this, routes of 57 trains to be extended. ‘Anubhuti’ a special coach in select trains to provide excellent ambiance facilities and services to be started. The ministry plans to impart skills to the youth in railway and thus contribute to the government’s national skill development programme. Railways has presented an employment bonanza offering 1.52 lakh in the year that follows.
As a result of the retrospective effects of the passenger fare hike in January which was expected to generate a revenue of 1200 crore between Jan 21 and March 31, the Railway Minister declared a no passenger fare hike for the following year, thus hoping to get into the good books of the common man before the 2014 elections but the trade-off ain’t all that attractive. In order to make up for the anticipated loss of rupees 3,300 cr as a result of the diesel price hike, freight charges have been increased by 5% . A proposal to review freight prices twice a year has been put forth by the railway minister. However the BSP chief Mayawati has opposed the proposal considering the resulting hike in the prices for commodities transported through rail and the adverse effects that the price hike would have on the lives of the poor and the middle class. A rise in freight charges may also result in a shift from rail to road giving a boost to freight being carried by trucks.
Also, the charges of super fast trains, ‘tatkal’ tickets and reservation and cancellation have been raised. Thus a ‘no passenger fare hike’ declaration remains ineffective in making the citizens better off.
For the first time in four years the operating ratio (a measure of each paisa spent towards earning rupee 1) for the railways has come down to 88.8% from a previous 90%. A target of further bringing it down to 87.8% has been set.
Indian rail network even though being the preferred mode of mass travel, carrying 23 million people and an average of two million tonnes of freight everyday does not make enough money and thus calls for private investment. During the 12th five-year plan the planning panel targets to get rupees 1 lakh crore of investment through the public-private partnership mode.
The Former Union Railway Minister, Dinesh Trivedi expresses his serious doubts on the success of the current budgetary plans. Due to the expected inflationary effects (likely to be a marginal 0.35%) of the freight price hike, he fears the operating ratio might go back to 90%. Also; according to him; in a growing economy, the railways have a potential of contributing up to 2.5% to the GDP. This budget on the other hand will drag down as it fails to allow movement of goods and services at a more competitive rate.
ED’s take on the Inflation Issue
The laying down of new tracks and the introduction of various new services (ease of booking, ‘Anubhuti’ coach, free Wi-Fi etc) have made rail travel pretty attractive and can give a great boost to the railway industry’s revenue. However the rise in various charges (reservation and cancellation etc), freight price hike of a huge 5% can lead to discouraging the use of rail as a mode of transportation. With their introduction, if the services can efficiently be offered at lower rates, it will be great for the economy. Also lower rates will make it feasible for the poor and the middle class to travel by trains. The inflationary effects of the price hike might turn tables upside down for the Railway Ministry.
Hoping that as the year proceeds the plans of the ministry are well accomplished and bring fruitful results for the economy.
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Views presented in the article are those of the author and not of ED.