No hike in fares, freight rates

Railway Minister Suresh Prabhu on Thursday desisted from raising fares and freight rates in his second Budget, but promised to cut cost and exploit new sources of revenue beyond tariff as he announced three new superfast trains and completion of three freight corridors by 2019.

Presenting the Railway Budget for 2016-17 in Parliament, he said the guiding principles to keep the modernisation of world’s fourth-largest network on track are new sources of revenue, expenditure optimisation and new operating structure.

The announcements included India’s first rail auto hub in Chennai, boost to e-catering, creation of dedicated north-south, east-west and east coast freight corridors by 2019; connectivity to North-East and Wi-Fi in railway stations.

Unlike the last year when he tweaked freight rates to mop up an additional Rs 4,000 crore, Prabhu made no fresh changes either in passenger fares or freight rates.

The plan outlay for Railways has been put at Rs 1.21 lakh crore for 2016-17, up by 20 per cent from the current year’s estimated expenditure. Its focus was on completion of the ongoing projects rather than announcing new ones.

“These are challenging times, may be one of the toughest. We are faced with two headwinds, entirely beyond our control; tepid growth of our economy’s core sectors due to international slowdown and the looming impact of the 7th Pay Commission and increased productivity bonus payouts,”  he said in his over an hour-long speech.

Slowdown in growth of passenger and freight revenues has put pressure on the Railways’ finances and Prabhu said the Railways would need to cut costs, grow its freight business, which provides two-thirds of its revenue and target new sources of non-tariff revenue through measures such as redeveloping train stations. “We need to look beyond the current approach to expand the basket (of freight commodities). We will make sure we recapture the traffic,” Prabhu said, adding that Railways need to “reorganise, restructure and rejuvenate”.

The three new superfast trains announced by him include ‘Humsafar’, which will be a fully air-conditioned 3AC service with option of meals; ‘Tejas’ will showcase the future of train travel in India with speed of up to 130 km per hour with onboard services such as entertainment, local cuisine and WiFi. The two trains will ensure cost recovery through tariff and non-tariff measures while ‘Uday’ will be an overnight double-decker along with ‘Utkrishit’ – a double-decker air-conditioned yatri express on the busiest routes.

For improving the quality of travel for unreserved passengers, a superfast ‘Antyodya’ express service would be introduced. ‘Deen Dayalu’ unreserved coaches with potable water and higher number of mobile charging points would also be introduced.

He also announced setting up of a Rail Development Authority to enable fair pricing of services, promote competition, protect customer interest and determine efficiency standards. The draft Bill in this regard will be ready after holding extensive stakeholder consultations.

The Railways have a saving of Rs 8,720 crore from previous Budget estimates, Prabhu said. This year, “we hope to generate revenues to the order of Rs 1,84,820 crore”. The focus will be on capital expenditure with a mix of various sources of funding in order to ensure the projects are given assured funding.

“The dignity of passengers, speed of trains and progress of nation are main themes of this budget,” he added. ‘Reorganize, Restructure and Rejuvenate’ are the three pillars of the Rail Budget. Prabhu announced plans to eliminate all unmanned level crossings by 2020, electrify 2000-km rail line next year and increase electrification budget by 50 per cent.