Commemorating the 150th year of the railways, the railway minister announced 2003-04 as 'customer satisfaction year'. "The aim of this year's budget has been to increase our (railways) earnings without a hike in fares and freight rates. Issues like safety, security and providing basic amenities to the passengers will also be of special importance," says IIMS Rana, chairman, Railway Board.
"The revival of railways was long overdue and the proposals of not hiking passenger fares and rationalisation of freight rates show government's commitment in that direction" says A C Muthiah, president, FICCI.
Passenger fares. This segment has largely remained untouched except for minor changes in the fare structure of Rajdhani and Shatabdi trains. The fares for these trains is proposed to be linked to the fare structure of mail/express trains. The basic fare for each class of Rajdhani and Shatabdi Express will be fixed 15 per cent higher than the fares of corresponding class of superfast mail/express trains on a uniform basis. This will result in lower basic fares for these trains between most stations.
Concessions. The concession age for male senior citizens has been lowered to 60 years from 65 years earlier and they will now get 30 per cent concession on trains. For cancer and heart patients, Kumar announced 75 per cent concession on all trains. The limit on accredited press correspondents' concessional travel as well as the distance restriction for their place of residence is proposed to be removed. Further, they would now be entitled for a 30 per cent concession in Rajdhani and Shatabdi Express trains also.
Concessional fares for non-peak period between July 15 and September 15 in 2003 in AC 1st Class and AC 2 tier has also been proposed in all Rajdhani trains.
Freight rates. The minister announced rationalisation in the freight rate structure. The number of classes in which freight is calculated are proposed to be reduced from 32 to 27. The classification of certain commodities, where freight rates are currently too high, will also be rationalised. As a result freight rates for certain commodities such as diesel, LPG, crude oil, cement sheets, iron and steel will come down. The proposed reduction in freight rates due to lowering of classification will range from 5.3 per cent to 9.5 per cent.
In order to increase its share in transportation of petroleum products, the railways plans to enter into long-term agreements with individual oil companies for further reduction in freight rates. "Post APM, petro companies are not reimbursed the cost of freight by the government. A reduction in the rates will have a positive impact as it would translate into lower costs in case prices of crude remain volatile in the international market" says Harshavardhan Dole, analyst, Dalal & Broacha.
The classification of cement, clinker, manganese ore and caustic soda liquid are also proposed to be reduced, which will lead to a reduction in freight rates by around 3.7 per cent. "Cement companies depend on the railways for more than 40 per cent of their dispatches and rail freight accounts for 5-9 per cent of sales value for the industry. Proposal to reduce freight rates is moderately positive for the profitability of the cement companies" says Jignesh Shah, strategist, ASKRJ Investment Management.
The annual plan outlay for the Railways has been pegged at Rs 10,670 crore for 2003-04. Taking into account the outlay of Rs 2,311 crore on safety related works through the Special Railway Safety Fund (SRSF), the total outlay comes to Rs 12,918 crore. This is Rs 603 crore higher than the revised estimates of last year.
Railways is eyeing higher revenue from freight traffic this year. But will it manage to lure a significant section of road traffic to the tracks by just reducing freight rates? This year's budget may be a mixed bag for railways but it has definitely given the common man and the corporates some relief.
For in-depth, objective and more importantly balanced journalism, Click here to subscribe to Outlook Magazine