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Stage set for another railway budget

New Delhi, March 13 (IANS) With passenger fares unlikely to be hiked, Railway Minister Dinesh Trivedi will present his maiden railway budget for 2012-13 Wednesday amid concerns over the financial health of the world's second largest network.

A cash strapped Indian Railways, which runs 10,500 trains and ferries 22 million passengers daily over 64,000 km of track, is looking at an earnings shortfall of Rs.7,000 crore.

Poor financial management has left Indian Railways staring at an earnings shortfall despite gross budgetary support of Rs.20,000 crore last year and a Rs.3,000 crore loan approved by the finance ministry Feb 6.

"It is an unprecedented situation," a senior railway official commented on condition of anonymity while describing the financial crisis.

Recently, two expert panels, headed by former Atomic Energy Commission chairman Anil Kakodkar and prime minister's adviser Sam Pitroda, said the railways would need around Rs.9 lakh crore over the next five years to follow the safety and modernisation road map suggested by them.

No one knows where the money will come from.

Passenger fares have been on a freeze since 2002-03 as Trinamool Congress chief Mamata Banerjee, a former railway minister, is opposed to hiking fares.

In the process, the railways has little money to expand the network. Trivedi is also a Trinamool man.

With 19 members in the Lok Sabha, the Trinamool Congress is a crucial ally of the Manmohan Singh-led United Progressive Alliance (UPA) and has often shelved key reforms such as foreign equity in retail.

"Revision of passenger fares is long overdue. The railways need to invest in additional lines and build more rakes," former Railway Board chairman R.K. Singh told IANS.

What bothers the railways is the fact that its operating ratio now stands at 100 percent, up from 75 percent in 2008-09. This means every rupee generated is spent on running the network, with no room for expansion.

"All big projects are at a standstill. The railways are unable to maximise earnings," said Singh, adding there was no money left to address crucial areas like the renewal and replacement of existing assets and taking up further development projects.

Quiz: How well do you know India's economy?

Question 1

Which of these products is India the world's largest producer of?

Poll Choice Options
  • Wheat
  • Rice
  • Milk
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