NEW DELHI: Lower fares and freight rates. High revenue growth and record operational efficiency in the current year. Large plan outlays to increase badly-needed capacity. Dispersed dispensing of tickets and lower fees for electronic ticketing to reduce queues at booking counters.
Tech-savvy ticket examiners armed with hand-held devices on high-end trains to reduce arbitrariness in filling up vacant berths. New trains, including high-speed trains, and additional coaches on existing trains. Railway minister Lalu Prasad’s fourth budget lives up to his reputation as a turnaround artiste worthy of a B-school case study.
However, under the glitz, the hard reality of years of under-investment and constrained capacity bites: the revenue growth projected for the next fiscal, at 12.8%, is lower than the 16% achieved this year and 15% in 2005-06. The projected growth is also lower than the probable growth of the economy measured in current rupees, indicating the Railways’ failure to keep up with the rest of the economy.
“The railway minister has reduced passenger fares across the board. He has also moderated the freight charges. These will have a beneficial impact on price stability,” finance minister P Chidambaram said in a statement. The commodities for which freight rates have been lowered include petrol, diesel and iron ore.
The Railways has achieved an operating ratio of 78.7%, a record, in the current year. This means working expenses are more than a fifth lower than total traffic receipts. This ratio had climbed all the way to 98.3% in 2000-01, leaving the Railways with little money of its own for investment or paying dividend to the government. In 2007-08, the operating ratio is projected to stay below 80%.
The lower increase in expected revenues next year indicates that the Railways has used up all slack in the system, to squeeze additional revenue out of existing capacity. The logical thing to do is to invest in hiking capacity. Mr Prasad has budgeted for a plan outlay of Rs 32,165 crore, a creditable 19% step-up over the current year’s outlay, which itself was 26.6% more than the outlay for 2005-06.
The lowering of fares in AC-1 sleeper by 3% in peak periods and by 6% in lean periods, in AC-2 sleeper by 2% and 4%, and the newly-built AC-3 sleeper by 4% and 8% will no doubt help the Railways fight competition from low-cost airlines. However, the slashing of fares by 4% in the newly-designed sleeper class coach, the Re 1 decrease in prices for unreserved travel and a 20% reduction on superfast surcharge levied on second class tickets for superfast trains will add to the Railways’ cross-subsidy bill, which stands at a whopping Rs 4,000 crore as of now
copied from http://economictimes.indiatimes.com
Sunday, March 4, 2007
Rail budget an attack on inflation: Lalu
NEW DELHI: Asserting that the Railway budget for 2007-08 was aimed at "slapping" inflation through measures to lighten the burden on the common man, Railway Minister Lalu Prasad said several measures including those against hoarding have been taken to contain prices.
"We will not facilitate the products of the hoarders and will instead give preference to the procurements of foodgrain by the Food Corporation of India", he said in an hour long post-budget press conference.
"At a time when there is increase in prices of some commodities, the Rail budget is a slap on the price rise as we have cut freight charges on petrol and diesel", Prasad said.
He said the freight rate for carrying foodgrain on return empty trip has been reduced by 42 per cent, besides lowering the overall freight slab for foodgrains.
The Minister said incentives had also been provided for FCI if the commodities are packed instead of sending them loose.
Similarly, there was a 30 per cent concession on goods sent in open wagons.
In reply to a query, the Minister said the revenue surplus is estimated to cross Rs 20,000 crore during the next financial year despite a likely loss of about Rs 4,500 crore due to cut in passenger fares. Prasad said the profitability in Railways had debunked the theory that only privatisation can bring in turn-around.
"We will allow public-private partnership, but the controlling stakes would always be with the government", he said.
He said private investments worth Rs 10,000 crore had been cleared in the container service sector.
Prasad said passengers travelling in sleeper class and 3-tier air-conditioned class will start enjoying lower fares when the high capacity bogies begin to replace the existing ones.
He said 2,500 coaches having raised berth capacity of 84 seats from the present 72 will be manufactured every year.
On the performance of Railways, the Minister said as against the 666 million tonnes freight target for 2006-07, the Railways would be carrying 726 million tonnes of freight this fiscal.
He said new proposals such as vendor coaches and additional 'Garib Rath' (poor man's chariot) trains were focused on the common man.
Copied from http://economictimes.indiatimes.com
"We will not facilitate the products of the hoarders and will instead give preference to the procurements of foodgrain by the Food Corporation of India", he said in an hour long post-budget press conference.
"At a time when there is increase in prices of some commodities, the Rail budget is a slap on the price rise as we have cut freight charges on petrol and diesel", Prasad said.
He said the freight rate for carrying foodgrain on return empty trip has been reduced by 42 per cent, besides lowering the overall freight slab for foodgrains.
The Minister said incentives had also been provided for FCI if the commodities are packed instead of sending them loose.
Similarly, there was a 30 per cent concession on goods sent in open wagons.
In reply to a query, the Minister said the revenue surplus is estimated to cross Rs 20,000 crore during the next financial year despite a likely loss of about Rs 4,500 crore due to cut in passenger fares. Prasad said the profitability in Railways had debunked the theory that only privatisation can bring in turn-around.
"We will allow public-private partnership, but the controlling stakes would always be with the government", he said.
He said private investments worth Rs 10,000 crore had been cleared in the container service sector.
Prasad said passengers travelling in sleeper class and 3-tier air-conditioned class will start enjoying lower fares when the high capacity bogies begin to replace the existing ones.
He said 2,500 coaches having raised berth capacity of 84 seats from the present 72 will be manufactured every year.
On the performance of Railways, the Minister said as against the 666 million tonnes freight target for 2006-07, the Railways would be carrying 726 million tonnes of freight this fiscal.
He said new proposals such as vendor coaches and additional 'Garib Rath' (poor man's chariot) trains were focused on the common man.
Copied from http://economictimes.indiatimes.com
Monday, February 26, 2007
Indian Railways May Keep Charges on Hold, Curbing Inflation
By Cherian Thomas and Anand Krishnamoorthy
Feb. 23 (Bloomberg) -- Indian Railways, the nation's biggest employer, may leave freight rates unchanged for a third year to compete against a growing road network and to help keep pressure off inflation.
Revenue earned by Indian Railways rose 17 percent in the first 10 months of the year as demand generated by the second- fastest expansion among major economies boosted traffic. The pace of growth will ensure Asia's oldest network has enough to meet the 3 trillion rupees ($68 billion) of investment needed for its upkeep by 2012. Railways Minister Lalu Prasad will announce the budget at noon on Feb. 26 in New Delhi.
Prasad has kept freight rates unchanged since November 2004 to wean companies such as cement maker Holcim Ltd. away from transporting goods on new highways and to improve the market share of railroads. Keeping transport charges on hold will also aid efforts to slow the fastest inflation in two years.
``A freight hike would further push up costs for everyone,'' said Ravi Sud, the chief financial officer of Hero Honda Motors Ltd., India's biggest motorcycle maker. ``We need all the tools we can right now to fight inflation and the rail budget will contribute to that effort.''
Indian Railways is the nation's main carrier of steel, aluminum, coal and other materials used by companies from carmaker General Motors Corp. to electricity producer NTPC Ltd. It also moves rice, wheat and other farm products across the world's seventh-biggest country by area.
J. P. Batra, the top bureaucrat in the Ministry of Railways, said last month that holding freight rates has helped the railways increase market share in products such as cement. He declined to specify the percentage increase or to mention whether any other products.
Road Option
``The policy to keep rail freight rates unchanged should continue to regain customers who have over the years switched to the roads option,'' said D. H. Pai Panandiker, president, RPG Foundation, an economic policy group in New Delhi.
State-run Indian Railways has about 1.5 million people on its payroll. It has presented its own budget since 1925, when British colonial rulers separated its finances from the federal government's accounts. It doesn't publish earnings.
Prime Minister Manmohan Singh last week vowed to take a ``multi-pronged strategy'' to curb India's inflation. The benchmark wholesale price index surged to 6.73 percent in the week ended Feb. 3, the highest since Dec. 11, 2004.
Singh is concerned rising prices may erode his Congress party's popularity ahead of polls this year in the northern state of Uttar Pradesh, which elects a seventh of all lawmakers in parliament. It will also set the tone for general elections in two years.
Wheat, Pulses
The government on Feb. 15 cut prices of gasoline and diesel for the second time in 2 1/2 months to rein in inflation. India also banned overseas sales of wheat and pulses to build stockpiles and curb price increases.
Railways' share of the country's freight traffic halved to 30 percent over the past five decades as the government spent $14 billion adding to the 3.3 million kilometers of highways, expressways and rural roads.
New pipelines by oil companies and the improvement in coastal shipping also contributed to the decline of railways, which depend on freight for three-fifths of its revenue.
In the 13 years before 2004, when India Rail stopped raising freight rates, charges rose by an average 5 percent a year, according to R. Venkateshan, transport economist at National Council of Applied Economic Research in New Delhi.
Indian Railways, which expects revenue of 600 billion rupees in the year to March 31, began constructing 220 billion rupees of freight-only lines last year that will connect the financial hub of Mumbai on the west coast and Kolkata in the east to the capital New Delhi.
Independence
India's economy will probably grow 9.2 percent in the year ending March 31, the fastest pace on record. India has averaged 8.6 percent growth in the past four years, the quickest expansion since the country's independence in 1947.
India railways' network moved 593.67 million tons in the 10 months ended Jan. 31, almost 10 percent more than a year earlier. The network was budgeted to carry 726 million tons of freight in the year ending March 31.
``Prasad may cut passenger fares as railways is facing competition from low cost air carriers,'' said RPG's Panandiker.
Five new low-fare airlines including Deccan Aviation Ltd. and SpiceJet Ltd. have started in the past three years in India offering fares as low as 1 rupee (2 cents) to woo customers who have traditionally traveled by train.
India was the first in Asia to get a passenger railway when British rulers opened a 21-mile track from Mumbai to Thane on April 16, 1853. The network now covers 63,000 kilometers and is the world's second largest under a single management, according to Indian Railways.
15 Million People
It runs 11,000 trains a day, moving about 15 million people, or almost the combined population of New Zealand, Hong Kong and Singapore.
India needs to spend money to upgrade the network as the key railway tracks connecting the nation's biggest cities are ``saturated in most sections,'' according to a May 2002 report by the Indian Railways.
As many as 2,500 people have died in rail accidents between 1960 and 2004, and as many as 6,830 trains have derailed in that period, according to the railways.
``The railways should focus more on upgrading its network to compete with roads a lot better,'' said Hero Honda's Sud. ``I am expecting a big thrust in the budget for infrastructure.''
To contact the reporters on this story: Cherian Thomas in New Delhi at cthomas1@bloomberg.net ; Anand Krishnamoorthy in New Delhi at anandk@bloomberg.net
Feb. 23 (Bloomberg) -- Indian Railways, the nation's biggest employer, may leave freight rates unchanged for a third year to compete against a growing road network and to help keep pressure off inflation.
Revenue earned by Indian Railways rose 17 percent in the first 10 months of the year as demand generated by the second- fastest expansion among major economies boosted traffic. The pace of growth will ensure Asia's oldest network has enough to meet the 3 trillion rupees ($68 billion) of investment needed for its upkeep by 2012. Railways Minister Lalu Prasad will announce the budget at noon on Feb. 26 in New Delhi.
Prasad has kept freight rates unchanged since November 2004 to wean companies such as cement maker Holcim Ltd. away from transporting goods on new highways and to improve the market share of railroads. Keeping transport charges on hold will also aid efforts to slow the fastest inflation in two years.
``A freight hike would further push up costs for everyone,'' said Ravi Sud, the chief financial officer of Hero Honda Motors Ltd., India's biggest motorcycle maker. ``We need all the tools we can right now to fight inflation and the rail budget will contribute to that effort.''
Indian Railways is the nation's main carrier of steel, aluminum, coal and other materials used by companies from carmaker General Motors Corp. to electricity producer NTPC Ltd. It also moves rice, wheat and other farm products across the world's seventh-biggest country by area.
J. P. Batra, the top bureaucrat in the Ministry of Railways, said last month that holding freight rates has helped the railways increase market share in products such as cement. He declined to specify the percentage increase or to mention whether any other products.
Road Option
``The policy to keep rail freight rates unchanged should continue to regain customers who have over the years switched to the roads option,'' said D. H. Pai Panandiker, president, RPG Foundation, an economic policy group in New Delhi.
State-run Indian Railways has about 1.5 million people on its payroll. It has presented its own budget since 1925, when British colonial rulers separated its finances from the federal government's accounts. It doesn't publish earnings.
Prime Minister Manmohan Singh last week vowed to take a ``multi-pronged strategy'' to curb India's inflation. The benchmark wholesale price index surged to 6.73 percent in the week ended Feb. 3, the highest since Dec. 11, 2004.
Singh is concerned rising prices may erode his Congress party's popularity ahead of polls this year in the northern state of Uttar Pradesh, which elects a seventh of all lawmakers in parliament. It will also set the tone for general elections in two years.
Wheat, Pulses
The government on Feb. 15 cut prices of gasoline and diesel for the second time in 2 1/2 months to rein in inflation. India also banned overseas sales of wheat and pulses to build stockpiles and curb price increases.
Railways' share of the country's freight traffic halved to 30 percent over the past five decades as the government spent $14 billion adding to the 3.3 million kilometers of highways, expressways and rural roads.
New pipelines by oil companies and the improvement in coastal shipping also contributed to the decline of railways, which depend on freight for three-fifths of its revenue.
In the 13 years before 2004, when India Rail stopped raising freight rates, charges rose by an average 5 percent a year, according to R. Venkateshan, transport economist at National Council of Applied Economic Research in New Delhi.
Indian Railways, which expects revenue of 600 billion rupees in the year to March 31, began constructing 220 billion rupees of freight-only lines last year that will connect the financial hub of Mumbai on the west coast and Kolkata in the east to the capital New Delhi.
Independence
India's economy will probably grow 9.2 percent in the year ending March 31, the fastest pace on record. India has averaged 8.6 percent growth in the past four years, the quickest expansion since the country's independence in 1947.
India railways' network moved 593.67 million tons in the 10 months ended Jan. 31, almost 10 percent more than a year earlier. The network was budgeted to carry 726 million tons of freight in the year ending March 31.
``Prasad may cut passenger fares as railways is facing competition from low cost air carriers,'' said RPG's Panandiker.
Five new low-fare airlines including Deccan Aviation Ltd. and SpiceJet Ltd. have started in the past three years in India offering fares as low as 1 rupee (2 cents) to woo customers who have traditionally traveled by train.
India was the first in Asia to get a passenger railway when British rulers opened a 21-mile track from Mumbai to Thane on April 16, 1853. The network now covers 63,000 kilometers and is the world's second largest under a single management, according to Indian Railways.
15 Million People
It runs 11,000 trains a day, moving about 15 million people, or almost the combined population of New Zealand, Hong Kong and Singapore.
India needs to spend money to upgrade the network as the key railway tracks connecting the nation's biggest cities are ``saturated in most sections,'' according to a May 2002 report by the Indian Railways.
As many as 2,500 people have died in rail accidents between 1960 and 2004, and as many as 6,830 trains have derailed in that period, according to the railways.
``The railways should focus more on upgrading its network to compete with roads a lot better,'' said Hero Honda's Sud. ``I am expecting a big thrust in the budget for infrastructure.''
To contact the reporters on this story: Cherian Thomas in New Delhi at cthomas1@bloomberg.net ; Anand Krishnamoorthy in New Delhi at anandk@bloomberg.net
Friday, February 23, 2007
Railwayshit.com
Hi Friends,
Kindly visit railwayshit and make your comments on the "forum" at that site, email me at indianevada@yahoo.com The full text of the case is on the site.
Best wishes,
George
Kindly visit railwayshit and make your comments on the "forum" at that site, email me at indianevada@yahoo.com The full text of the case is on the site.
Best wishes,
George
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