Chugging along
Economic Downturn To Haunt Railways
HELLO populism, goodbye financial consolidation. That is the summary of the proposals presented by railway minister Mamata Banerjee on Friday. Despite the financial strain faced by the Indian Railways, Ms Banerjee has chosen to stand still on passenger fares and freight rate. It is a relief that she has resisted following her predecessor in cutting fares. But with gross traffic receipts expected to grow at a slower 7.3%, while total working expenses are set to climb by 12.7%, the operating ratio is set to deteriorate to 92.5% in 2009-10 from 88.3% in the revised estimates for 2008-09. Much of the increase in working expenses can be attributed to the increased staff cost (both salaries and pension) on account of the implementation of the Sixth Pay Commission awards, and rising cost of fuel and material for maintenance. However, the estimated 7.3% growth of traffic earnings may also be optimistic (although the target for freight movement has been scaled down from 910 metric tonne in the interim railway budget to 882 MT), as the minister is betting on the fiscal stimulus led turnaround in the economic growth and new traffic streams. Both of these are imponderables at this stage as external trade related movement of goods remains depressed and industry continues to prefer road transportation for the end-to-end solution it provides. But one should not rule out the possibility of a mid-course correction of fares or freights.
For railway passengers, the budget offers plenty of reasons to cheer, as the minister has promised to improve connectivity between various cities with new trains and lines. Of course, it remains to be seen when and how many of these trains will actually be introduced. She has also offered certain concessions to passengers, some deserving while some others patently avoidable. Her decision to introduce 11 non-stop trains, a welcome move from passengers perspective, may adversely affect freight movement as well as the timetable of other passenger trains, as these trains will be given the right of way. Unless, of course, the railways upgrades infrastructure and signalling along those routes super fast. Her commitment to take forward her predecessor’s pet project, the dedicated freight corridor, should hopefully help the country’s commerce. However, speed in implementation and adequate financing will hold the key.
For railway passengers, the budget offers plenty of reasons to cheer, as the minister has promised to improve connectivity between various cities with new trains and lines. Of course, it remains to be seen when and how many of these trains will actually be introduced. She has also offered certain concessions to passengers, some deserving while some others patently avoidable. Her decision to introduce 11 non-stop trains, a welcome move from passengers perspective, may adversely affect freight movement as well as the timetable of other passenger trains, as these trains will be given the right of way. Unless, of course, the railways upgrades infrastructure and signalling along those routes super fast. Her commitment to take forward her predecessor’s pet project, the dedicated freight corridor, should hopefully help the country’s commerce. However, speed in implementation and adequate financing will hold the key.
Source: ET
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