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Text of the Railway Minister's budget speech

The text of the Railway Budget as presented on Friday in the Lok Sabha by Railway Minister Lalu Prasad Yadav.

india Updated: Feb 24, 2006 19:36 IST

1. Mr. Speaker Sir, I rise to present the Budget Estimates 2006-07 for the Indian Railways at a point in time when, there has been a historical turn around in the financial situation of the Indian Railways. Our fund balances have grown to Rs. 11,000 cr and our internal generation, before dividend has also reached a historic level of Rs. 11,000 cr. With this unprecedented achievement, we are striding to realize the Hon’ble Prime Minister’s dream of making Indian Railways the premier railway of the world. Sir, this is the same Indian Railways which, in 2001 had deferred dividend payment, whose fund balances had reduced to just Rs. 350 cr and about which experts had started saying that it is enmeshed a terminal debt trap. You might term this a miracle, but I was confident that :

“Mere zunu ka natija zaroor niklega, isee siaah samandar se noor niklega.”

2 Sir, the whole nation can see today that track is the same, railwaymen are the same but the image of Indian Railways is aglow. This has been the result of the acumen, devotion and determination of lakhs of railwaymen. Sir, the general perception so far has been that Railways’ finances cannot be improved without increasing second class passenger fares. But my approach is entirely different. In my view, improvements can only be brought about by raising the quality of services, reducing unit costs and sharing the resultant gain with customers. Therefore, instead of following the beaten path, we decided to tread a new one.

“Hum bhi dariya hai, apnaa hunar hame maloom hai,jis taraph bhi chal padenge, rastaa ban jayega.”

Financial turn around of Indian Railways

3. Sir, I take pride in informing this House that in the first nine months of the year 2005-06, the Railways’ output has been record breaking. The growth in freight loading is 10% and in freight revenues it is over 18%. Based on the trends up to now, the freight loading target is being increased from 635 mt to 668 mt and the goods revenues target from Rs. 33,480 cr to Rs. 36,490 cr. Thus, Railways would achieve incremental freight loading of 111 mt in two years itself, which will be 133% higher as compared to the incremental loading of 83 mt of entire Ninth Five Year Plan period. Tenth Plan targets of 624 mt loading and 396 billion tonne kilometers have been surpassed one year in advance. Sir, I not only hope but firmly believe that we would surpass the Tenth Five Year Plan’s incremental target of 63 billion tkm for freight business by over 200%.

4.According to Revised Estimates, Passenger Earnings, Other Coaching earnings and Sundry Other earnings are likely to register growths of 7%, 19% and 56%, respectively. Gross Traffic Revenues are expected to be Rs. 54,600 cr, which are higher as compared to the previous year and Budget Estimates of the current year by 16 % and 7%, respectively.

5.Ordinary Working Expenses are likely to increase by Rs. 1,200 cr, mainly due to post-budgetary increase in fuel prices. Lease charges paid for rolling stock taken on financial lease have till now been shown as operating expenditure, without segregating interest and principal repayment component. As mentioned in my speech last year, to bring in more transparency and better accounting practices, necessary changes in accounting system have been made to reflect expenditure on lease charges accordingly, with necessary approval. These changes in the accounting system have effected a reduction of Rs. 1,616 cr. in the operating expenses. Overall, Revised Estimate of Ordinary Working Expenses has been kept at Rs. 35,184 cr, which is Rs. 416 cr lesser as compared to the Budget Estimates. As a result of these changes in the accounting system, an improvement of around 3% is also reflected in the operating ratio.

6.According to the Revised Estimates of the current year, Indian Railways’ internal resources before dividend, would reach a historic level of Rs. 12,966 cr. Even after setting aside the effect of the accounting changes mentioned earlier, this amount would be Rs. 11,350 cr. Fund balances would be at a record level of Rs. 11,280 cr and the operating ratio is expected to improve to 83.7%.

Technological Upgradation and Modernisation

7. The technological upgradation in every field of Railway working will be given the utmost priority so that the reliability of services can be improved to gain customers’ confidence and also bring down the operating and maintenance costs.

8. Wagons are Railways’ revenue earning assets. While the Railways modernized their locomotives and coaches in nineties, wagons presently deployed still use the technology of the eighties. It is not possible to load our covered and open wagons beyond 64 tonnes, except with certain heavy commodities. RDSO is designing new high capacity wagons. Commodities like coal can be loaded up to 70 tonnes in these new wagons. Prototypes of these wagons will be developed in the coming year and trials will be completed. Regular production of the new wagons, with payload to tare weight ratio of even better than 3:1, will start from 2007-08. All possible efforts will be made to start manufacturing aluminum and stainless wagons also in 2006-07 to improve the payload to tare weight ratio.

9.Sir, while this is an important achievement, it is not enough. In the future we have to manufacture 25 tonne axle load wagons which can carry loads up to 80 tonnes and whose payload to tare weight ratio is around 4:1. We need to manufacture special wagons to increase Railways’ share in the transportation of commodities like motor vehicles, petrochemicals, etc. At present this technology is not available in our country. Therefore, transfer of technology will have to be encouraged for developing such wagons for which the Railways will provide the necessary policy framework.

Use of modern Signaling and Telecommunication Technology

10. The advanced railways of the world are extensively using modern signaling and telecommunication technology to enhance safety, streamline train operations and increase line capacity. Using such technologies is cost effective. I, therefore, have decided that modern signaling and telecommunication means will be used for improving safety and enhancing line capacity on trunk and main routes. A multi disciplinary team will be constituted for an in depth study of various advanced signaling and telecommunication alternatives. This team will submit its report within three months. After reviewing the report, a policy will be framed for deciding extensive use of these technologies.

Use of IT in improving Railway Services

11.There has been a remarkable improvement in operating efficiency of freight transportation with the help of Freight Operating Information System. In the first phase of this project Rake Management System has been implemented at all major locations. In the second phase, Terminal Management System will also be implemented at all major locations. Apart from this, work is also progressing speedily on control charting, crew management and Coaching Operations Information System. Next year, all efforts will be made to implement Control Charting System on all the divisions. The complete computerization of Control Office, Coaching Operations Information System and interfacing of both these systems with National Train Enquiry System will directly benefit passengers and other rail users.

12.Railways run more than 2500 ordinary passenger trains everyday. From the point of view of speed and line capacity, MEMU and DEMU trains are more suitable in some circumstances. Therefore, I have decided to introduce MEMUs and DEMUs in future. This will not only enhance line capacity of various rail sections, but will also reduce the journey time.

Public Partnership and Public-Private Partnership Schemes

13.Today, when Indian Railways are scaling historic heights in freight and passenger business, we will not allow resource constraints to hamper expansion of rail network. We will encourage public partnerships and public-private partnership schemes for effecting significant improvements in rail services and development and expansion of rail network. To this end, a level playing field under a transparent policy will be provided to investors by further simplifying the policy of public-private partnership. This is the need of the hour :-

“Ek kadam hum badhe, ek kadam tum, aao milkar naap de, phasle chand tak.”

14. We invite State Governments, local bodies, ports and private sector to invest in rail projects. Ministry of Railways will make available many models of public partnership and public-private partnership. Till now, such projects were being implemented by SPVs under MOU agreements. Under this policy, eligible rail projects will also be awarded through open bidding so that a level playing field can be provided to all the parties by making the entire process competitive and transparent. It has also been decided to encourage such partnerships for unviable projects by arranging viability gap funding. At present, many partnership projects involving an investment of few thousand crore rupees, are under implementation. We would like to expand and develop the railway network by increasing the extent of this partnership many times over.

15. We are constructing 500 ROBs on cost sharing basis with many State Governments. Sir, through this august House, I request all State Governments and local bodies to come forward for the construction work of ROBs. I would like to assure the House that Railway would not lag behind in making available its share of Rs. 7,500 cr. out of total amount of Rs. 15,000 cr required for construction of one thousand ROBs. All proposals that are received from State Governments, for construction of ROBs, with cost sharing commitment, which fulfill necessary conditions would be processed without delay.

16.Our policy of permitting private parties to run container trains has been well received. 14 applicants have deposited Rs. 540 cr as registration fee. All the eligible applicants will be permitted to run container trains before 31st March and model concession agreement will also be prepared by the end of the current year. Through this august House, I would like to assure all stake holders that a level playing field would be made available without any discrimination.

17.I am happy to inform the House that the first double stack container train in Indian sub-continent would be inaugurated in the first week of March which is likely to make rail-based container transportation more economical and competitive.

18.Rail linked container depots and integrated logistic parks will have to be created to make the new container policy successful and increase railways’ share in non-bulk freight business. Railways have enough land in its goods sheds, which could be made use of for this purpose. In this regard, we would encourage creation of such facilities under public-private partnership schemes by making a transparent policy in a short time. With the help of this policy, we would be able to mobilize sizeable investments in container depots and container wagons.

19. Last year I had announced a new Wagon Investment Scheme. This scheme has become popular among customers and so far proposals have been received for manufacture of 25 rakes at an investment of Rs. 250 cr.

20.For transportation of specific commodities like motor vehicles, special wagons are needed which are presently not included in this scheme. New container train operators would also need container flat wagons in sizeable numbers. Under the present policy, customers can avail the benefits of wagon investment schemes and new container policy only by procuring wagons directly whereas in other modes of transportation, practice of leasing trucks, aircrafts, etc. is also prevalent. Therefore, we will have to develop a strong wagon leasing market for which we will take suitable policy initiatives.