Lalu shows how to make money

Lalu in his budget demonstrated uncanny ways of making money- not by exerting pressures on consumers but by rolling out incentives.
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Published on Feb 24, 2006 03:02 PM IST
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None | ByPress Trust of India, New Delhi

Be it passengers or freight or even commercial utilisation of Railways' properties and premises, Railway Minister Lalu Prasad on Friday demonstrated his uncanny ways of making money --- not by exerting pressures on consumers but by rolling out incentives to generate revenue.

His business and administrative acumen were on display as he opened new vistas for making money in the 2006-07 Railway Budget that targets internal revenue generation of over Rs 14,200 crore.

In the process, he also laid the turf for yet another price war with airlines, which with their low fares had weaned away upper class rail passengers.

In his Budget for 2006-07, Prasad announced a slew of measures like fare reduction for upper class (AC-I and AC-II) ranging from 10-18 per cent, discount on freights during peak and lean seasons, food courts, bank ATMs and cyber cafes in the railway stations, which will bring in additional revenue.

While keeping the overall passenger fares same, Prasad lowered the AC-I fares by 18 per cent and AC-II fares by 10 per cent to attract more passenger in these classes.

He also rolled out a fully-airconditioned 'Garib Rath' (poorman's chariot) for the masses with fares that will be 25 per cent lower than normal AC-III tier fares.

Since 1.6 crore passengers travel on railways everyday, Prasad said there was scope for increasing non-fare revenues from commercial publicity, catering, parking, banking, etc.

Moreover, Railways will also gain from introduction of modern facilities like ATMs and cyber cafes to be provided at all major stations.

To increase earnings from passenger traffic, Prasad rolled out an "increase volume - reduce unit costs" strategy.

This will be achieved through increasing the number of coaches and occupancy of trains, reducing travel time and losses of catering business.

Prasad said the move is aimed at cutting down losses in coaching services by about Rs 1,000 crore in coming year and by 50 per cent in next three years.

Railways will increase the number of coaches by up to 23-24 in 190 popular routes to earn an additional Rs 200 crore annually.

On the freight side, Prasad unveiled a slew of measures to divert more freight transport from road to rail.

Prasad announced a "dynamic pricing policy" which offers 30 per cent discount during lean season and 20 per cent discount in peak season.

A 'Loyalty Discount Scheme' was also rolled out to encourage transporting cement, iron and ore and steel by rail.

A long-term freight discount scheme to attract new customers and new freight traffic was also rolled out.

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