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2% fare cut is the only Lalu stimulus

Union Railway Minister Lalu Prasad Yadav had lots of self-congratulatory statements to make in his interim Budget for 2009-10...

Written by Raghvendra Rao | New Delhi | Published: February 13, 2009 4:00:30 am

Union Railway Minister Lalu Prasad Yadav had lots of self-congratulatory statements to make in his interim Budget for 2009-10,and naturally so,with just two months to go for general elections. Although he blamed the global recession for the sluggish performance this fiscal,he chose not to do his bit to boost growth and help mitigate the impact of the slowdown in his Rs 84,430 crore total expenditure plan for the next fiscal.

Though an interim Budget,Yadav stuck to his tried and tested formula of keeping all happy by cutting fares for all — masses and classes. But this time around,his largesse of a 2 per cent across-the-board fare cut will result in a Rs 700 crore lower passenger earnings. In 2008-09,he had announced fare cuts but those were dynamic and flexible,resulting in revenue foregone of just Rs 250 crore.

The meltdown pulled down his five-year cash surplus target of Rs 100,000 crore by Rs 10,000 crore. In fact,in the current fiscal,it is expected to be Rs 5,686 crore lower at Rs 19,320 crore compared with the Rs 25,006-crore surplus in 2007-08. Almost a third of his cash surplus of Rs 90,000 crore of last five years will go towards salaries and pension — Rs 28,000 crore over this fiscal (Rs 13,500 crore) and 2009-10 following the Sixth Pay Commission award.

The Railways’ operating ratio too has slumped to 88.3 compared with last fiscal’s 75.9. An operating ratio of 88.3 means the Railways spend Rs 88.3 to earn every Rs 100. But this is no mean achievement compared with the operating ratio levels of 99 and more that Railways suffered after Pay Commission awards in the earlier years.

Yadav’s contribution to the government’s stimulus effort is thus limited to the 2 per cent fare cut. He pointed out that during his tenure,AC I fares were cut 28 per cent,AC 2 by 20 per cent. He also cut second class fares by 5 per cent for tickets costing less than Rs 50 and by 2 per cent for tickets costing over Rs 50.

But Lalu has left unattended some of the big-ticket agenda his ministry had drafted. For instance,the dedicated freight corridor entrusted to a special purpose vehicle two years ago is yet to achieve financial closure. He has only restated the earlier decision to initiate pre-feasibility studies for high speed trains.

For the next fiscal,Yadav has targeted a 13 per cent growth in gross traffic receipts at Rs 93,159 crore compared with the revised estimate of Rs 82,393 crore for 2008-09. In fact,despite a powering down of the economy,the Railways managed to earn Rs 492 crore more than the Budget estimate. He hopes to wean away more people from air to Rail given his expectations that passenger earnings will grow 12 per cent next year. Given that he has refused to give any sops to the industry in terms of freight rate cuts,his expectations from freight too is decent at 8.8 per cent.


• Second class and sleeper class fares cut by two per cent for tickets costing Rs 50 and more.

• A/C First Class,II and III tiers and A/C Chair Car fares cut by two per cent.

• Fares reduced by Re 1 for ordinary train travel costing up to Rs 50 per ticket for journey above 10 km.


• 43 new trains to be started in 2009-10.

• Freight rates unchanged.

• Frequency of 14 trains to be increased,another 14 to be extended.

• Study for bullet trains on 6 stretches: Delhi-Amritsar,Ahmedabad-Mumbai-Pune,Hyderabad-Vijayawada-Chennai,Chennai-Bangalore-Ernakulam,Howrah-Haldia,Delhi-Patna.

• 25 surveys proposed comprising 14 new lines.


• Plan outlay kept at Rs 37,905 crore.

• Gross traffic receipts estimated at Rs 93,159 crore — increase of Rs 10,766 crore from last fiscal.

• Passenger traffic estimated to grow by 7 per cent.

• Freight loading targeted at 910 MT,up by 60 MT.

• Dividend payable to general revenues kept at Rs 5,304 crore for 2009-10.

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