India's poll-eve railway budget spares passengers

--- NEW DELHI

The Indian government on Jan. 30 decided against hiking railway passenger
fares and freight rates for fiscal 2004-05 in a what has been dubbed by the
opposition as an election-year budget.

Presenting a vote-on-account, or interim railway budget, for 2004-05, Railway Minister Nitish Kumar also announced the launch of 18 new non-stop trains to link all state capitals with New Delhi.

He kept passenger fares at the previous levels across all segments despite
lower-than-target earnings, apparently in view of the upcoming general election to be held by April.

Kumar said train reservations through mobile telephones would also be introduced and information about delayed departure would be made available
through SMS to passengers travelling on the Rajdhani and Shatabdi Express
trains.

The government unveils its annual railway budget every year towards the end
of February, ahead of the annual financial budget. In view of early elections, the government will not be able to announce a detailed railway and financial budgets.

Kumar's passenger-friendly budget, however, received flak from experts who
said India needed to raise railway passenger fares and freight rates to keep the mammoth network chugging along.

"It (the interim budget) clearly shows that the government is not willing to take any step that can disturb their electoral prospects," said T.K. Bhaumik, a senior economist with the Confederation of Indian Industry (CII).

"Railway passenger fare is something that directly affects a vast part of India's population. So the government is clearly not in a mood to face the ire of voters by increasing fares, though it puts pressure on finances," Bhaumik said.

Railway Board chairman R.K. Singh, however, justified the decision to keep
fares untouched, saying interim budgets usually did not contain any
proposal to increase freight and passenger fares.

Despite not raising the tariff, Singh said, "the railways are in a comfortable position as our receipts are in excess of our ordinary expenditure through various prudent cost-cutting measures."

Singh was non-committal on whether a tariff review would be in offing when
the full budget is presented after the general elections when the new government takes charge.

Spread over 63,000-route kms, the state-run Indian Railways carries 14 million passengers and operates 14,000 trains daily, making it the world’s largest railway system under a single management.

Kumar said 18 new trains modelled on the luxury Rajdhani Express trains would be introduced to connect state capitals with New Delhi. The new trains will have value-added features like "non-stop run beyond the state from where it originates, dedicated staff throughout the run and a public address system," he said.

The first of this series, the Karnataka Sampark Kranti Express from New Delhi to Bangalore was to be flagged off on Feb. 8.

Experts, however, say the focus of the interim railway budget should have been on improving the operations of existing trains and offering better quality of service to passengers.

"In the wake of a series of train accidents and a spurt in criminal activities on trains, one would have thought the Railway Ministry would put its house in order first before adding more trains," said a former railway official. "The new trains will only add to the already clogged network and create more management problems," he added.

In his speech, Kumar promised that his ministry would strive to bring down rail accidents to "near-zero level" in five years with increased investment on new technology. He also announced a hike in the outlay for implementing safety mechanisms from Rs. 23.11 billion to Rs. 23.51 billion.

A string of accidents badly rocked Indian Railways last year, claiming scores of lives. Officials admit that many derailments, averaging one a day, never get reported because there is no human casualty.

Kumar said all safety devices would be installed on trains and the rail network to prevent accidents due to bad weather and other causes --- with the aim of bringing down accidents to near-zero levels in five years.

Indian Railways has earmarked a budget for Rs.134.25 billion for 2004-05 for
launching a slew of modernisation initiatives and new trains and increasing investment in safety mechanisms.

Indian industry lauds railway's focus on development

-- New Delhi

Indian industry on Jan. 30 hailed the interim railway budget, terming it development-oriented with its focus on renewal of tracks, passenger safety,
security and better connectivity.

"The five pronged focus on efficiency, including replacement, renewals and
de-bottlenecking, security, safety, connectivity and passenger convenience,
would enable the Indian Railways to provide a fillip to the growth and development of the Indian economy," said Anand Mahindra, president of the
Confederation of Indian Industry (CII).

"This certainly reflects the high priority government is giving to up-gradation and modernisation of railway infrastructure," he said in a statement issued here.

Complimenting the railways for registering an impressive growth in freight traffic, Mahendra said: "The 6 percent-plus growth is in tune with the current resurgence in the economy and has been the result of the pragmatic approach and user friendly measures adopted by the railways."

Railway Minister Nitish Kumar's decision to maintain status quo on the freight and passenger tariff this year too, was also lauded as "the railways have an important role to play in sustaining and building competitiveness of Indian industry and freight tariff is a crucial factor in it."

While describing the interim budget as "populist," Associated Chambers of
Commerce and Industry of India (Asocham) President Mahendra Sanghi welcomed the focus on customer service and safety and introduction of new trains and extensions. He expressed hope that the full budget after the general
election would address critical issues such as new measures to bring more
revenues and optimal utilisation of railway's land.

This, he said, should be viewed in light of the competition from the road transport sector both in terms of movement of goods in small lots and its better safety record.

Federation of Indian Chambers of Commerce and Industry (FICCI) President Y.
K. Modi said: "It is heartening that the operating efficiency of the railways have increased resulting in lower expenses and leaving additional resources with the minister, which can be passed on to the consumer in the form of betterment of railway services and higher safety."

The Rs. 200 billion programme for execution and completion of railway projects in remote areas is a step in the right direction, said Modi, expressing confidence that the programme will achieve the objective of creating employment opportunities.

"This programme will hasten the process of development of backward areas
and generate additional demand for a wide range of manufactured items," Modi
said.

PHD Chamber of Commerce and Industry (PHDCCI) President Ravi Wig said:
"Given the fact that railways are the only high-capacity transport mode that
can meet the long-term needs of our large economy, the railway budget has
not done much to rise above the short-term focus in announcing new
initiatives.

"Strategic measures to bypass the phase of historic railway decline and entry into a renewed growth phase are missing," he said, adding that rationalisation of freight rates was essential to keep Indian Railways on track and woo back customers who moved away because of high tariffs.

Wig also emphasised the need to focus on providing dedicated corridors for movement of goods train on important routes and better connectivity from the
northern region to the ports.