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Lalu’s Rail Budget:ACCOUNTING JUGGLERY & AMBIGUITY, by Shivaji Sarkar,14 February 2009 Print E-mail

Economic Highlights

New Delhi, 14 February 2009

Lalu’s Rail Budget

ACCOUNTING JUGGLERY & AMBIGUITY

 By Shivaji Sarkar

Out of budget and a hidden hike in fare and freight has helped Railway Minister Lalu Prasad Yadav “show” a surplus in the Railway Budget. Moreover, his populist announcements rarely get passed on to the people. Besides, barring the ordinary second class passengers, fare cuts in last year’s budget did not reach the passengers. As for this year’s two per cent cut it is subject to review once the full budget is presented after the Lok Sabha elections.

Clearly, Lalu’s accounting jugglery does not include market borrowings of Rs 8030 crore.  Borrowings which were taken by the Indian Railway Finance Corporation and the Rail Vikas Nigam This reduces his surplus, if at all, from Rs 13,431 crore to a mere Rs 5,041 crore.. A question that could be raised: Is the Indian Railways on the Satyam path?

This is so because random changes in freight tariff, Tatkal operations, return ticket bookings and internet ticketing, which do not have parliamentary sanction, are actually fleecing rail users. Over five per cent of accruals, Rs 5000 crore have been earned from Tatkal, selling railway berths at a huge premium, says Member (Traffic) Sri Prakash soon after the Budget presentation. The Tatkal operations thus are considered the worst and most unethical business practice.

Passengers are not only being charged an additional Rs 300 for every upper class and Rs 100 for every sleeper class berth but are being made to pay a fare, which they are not undertaking i.e. from the train’s originating station till where it terminates. So, if one buys a Tatkal ticket from Kolkata to Patna and train is terminating at Delhi, he will be paying a full fare up to Delhi, with the Railways selling the same berth again from Patna!

Today, in many cases passengers find themselves being forced to buy Tatkal tickets – 30 per cent berths reserved for it - as they see their names on the waitlist even if they purchase tickets say a month in advance. This apart, the Railways earn Rs 40 per cancellation on each such ticket. But if it’s a Tatkal ticket and one cancels the journey, the Railways don’t return a penny.

Similarly, freight tariff is continuously changed without parliamentary sanction. The axle load (the weight of load a wagon can carry) too has been dangerously increased to make it a revenue spinner. In fact, the Railways has for the past five years been regularly tinkering with freight pricing.  

In a clever move, the Railways increased the freight tariff on essential foodgrains and commodities through a rate Circular No 03 of 2009, just 12 days prior to the presentation of the budget. In railway parlance, it is simple new jugglery --“amendments made in general classification of goods,” helping Lalu make his budget speech sans a raise in tariff!

Accordingly, senior railway officials reveal that Lalu has always had fantastic figures in mind and does not work out a sustaining pricing policy. The fear is that the real impact of the freight regime put in place by him would be known in the coming years. How? Well, the Railways as per budget statements have scrapped provisions for wagon investment scheme of Rs 500 crore. In simple terms, it means it has cut down investment in the wagon manufacturing.

Does this mean that the Railways could be heading for a crisis? It is no secret that higher freight tonnage has reported higher rail and welding fractures, failure of electric locos, brake beam defects and increased en route detachment due to wagon body bulging, stalling and wheel burns.

The Railways are also unclear about supporting the annual plan investment. Lalu says only Rs 9600 crore of Rs 36,773 crore would be coming from general revenue and the rest 72 per cent-- Rs 27,173 crore, as per expenditure statement, would emanate from extra budgetary resources. This only means further borrowing. Unless Lalu has some other methods, which he prefers to keep under wraps.  

Then again, the Railways have for many years been seeing a dream of introducing a bullet train. Can they achieve it and how? Sadly, the Railways are unable to run the so-called high-speed trains at more than an average speed of 65 km, including the Rajdhanis and the Shatabadis. The newly-introduced railway line to Agartala in Tripura is suited for a speed of 26 km! No goods train runs at a speed of over 25 km.

Lalu’s largesse for Bihar –an investment proposal of Rs 60,000 crore, however, takes the cake. Would it help him in the elections? Would these projects be actually implemented? Interestingly, the stone for a coach factory at Rae Bareli has been laid twice, but it’s nowhere near construction phase.

Remember, Lalu had announced Rs 21,578 crore as surplus in his 2007-08 rail budget. The reality, however, is “the excess for 2006-07 amounts to less than half at Rs 10,206 crore” as given in the detailed Explanatory Memorandum of the budget. Accordingly, there was Rs 416 crore reduced net revenue in 2007-08. 

What has Lalu given to passengers in the previous years? The answer: Precious little. Even a four  per cent cut in fares on sleeper class and 8 per cent cut in AC-3 tier and chair car announced in 2007-08 budget has not been passed on to the passengers. This is so because there was a clause that it would be affected only after the introduction of new LHB coaches. Well, since not many sleeper coaches (only 81 berths, AC 3 Tier coaches with 72 berths and Chair Car with 102 seats) were added, the then Railway Board Chairman soon after the budget presentation last year announced the benefit could not be passed on. The scheme of new coaches has since been scrapped.

In 2008-09, his announcement of seven per cent cut on AC I, four per cent on AC 2 tier fare were also not so real and lacked transparency.  The rider, as Lalu put it was: “This reduction will be only 50 per cent for popular trains and during the peak period”.

The big question then is: Are the Railways’ profits for real? Recall, that Lalu had maintained a studied silence during the reply to the debate last year. But this is a serious matter. The accounting procedures followed by the Indian Railways need a scrutiny. After all, the budgeting process is not for populist purposes. It had been introduced to ensure transparency and accountability in spending public money. ---INFA

(Copyright, India News and Feature Alliance)

 

 

 

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