Didi Budgets for Elections on Poll Eve

Showers goodies on West Bengal even as Railways slips into financial sinkhole

Railway Minister Mamata Banerjee showered goodies on her native land, promising new trains and projects ahead of assembly elections, but the cost of her populism is bleeding the finances of the network that is the country's biggest employer.
The firebrand politician from West Bengal said the government would introduce a new super-AC class of travel, consider running trains at speeds of 200 km an hour and launch a series of new trains, projects and collaborations, many in her home state.
But the Railways has not raised fares for the 22 million passengers that use its over 7,000 stations or freight rates for the 2.5 million tonnes of goods it carries every day.
The populist agenda, along with the heavy burden of higher wages because of the Sixth Pay Commission, meant that staff costs accounted for 42% of its expenditure. Its costs as a percentage of revenue, called the operating ratio, has risen to 92%, which analysts say is alarming.
"The high operating ratio shows perilous health of railway finances which requires immediate attention," said Abhaya Agarwal, executive director at Ernst & Young.
Banerjee said she was trying to balance the needs of an efficient railway network in an economy that is growing at 8-9% and the aspirations of millions of people it serves.
"In this budget we have attempted to combine a strong economic focus with an equal emphasis on social inclusion with a human face… Our lines touch the lives of humble people in tiny villages, as they touch the lives of those in the bustling metropolises," she said.
The railway budget for 2011-12 also announced plans to purchase 18,000 wagons, surpassing the current fiscal year's record procurement of 16,500 wagons. She also said that work on dedicated freight corridors would be completed on schedule.
More Bang, More Bucks
57,630 cr
Record plan investment
20,000 cr
Budget support

• No Increase in passenger fares and freights rates

• 68 new passenger trains to be introduced Rlys fail to generate surplus
    The Railways will count on budgetary support of 20,000 crore and market borrowings of 20,594 crore through Indian Railway Finance Corp, besides 10,000 crore from tax-free bonds. The Railways is borrowing heavily as it has failed to generate enough surplus. Shares of companies that count on railways for business plummeted after the budget. Kalindi Rail Nirman fell by more than 13%. Titagarh Wagons also dropped 13%, while Texmaco fell 8%.
Banerjee used her budget speech to score a point over the communist rulers of West Bengal, whom she hopes to dislodge in assembly elections this year. "As per my announcement to set up a coach factory at Singur, land has not been made available by the state government. However, several landowners have volunteered to sell their land directly to the Railways. In order to fulfill this commitment, I propose to set up a metro coach factory on the land purchased from willing sellers at Singur/adjacent Polba," she said.
Indian Railways expects freight loading to rise 6.4% to 993 million tonnes from the current year's reduced target of 924 million tonnes. Its working expenses overshot the budget estimate by 2,000 crore and the disruption of train movement caused a loss of 1,500 crore. The network also took a 2,000-crore hit due to the halt in iron ore exports.
The railway minister promised to reward states which protect trains from protests and "rail roko" agitation. In the current fiscal year, 1,500 trains were cancelled, another 1,500 were diverted and more than 3,500 rescheduled because of agitations.
"I am now making an offer that whichever state ensures trouble-free train running for the whole year shall be given two new trains and two projects as a special package," she said. But there were no such riders for projects in West Bengal. The minister announced 34 new services for the Kolkata Metro and said a committee had been set up to closely monitor progress of ongoing works there. In addition, seven new survey works for the Kolkata Metro Railway would be taken up, she said. Fifty new suburban services would be introduced in Kolkata region, while 47 would be started for the Mumbai suburban region and nine in Chennai. To expand the railway infrastructure, the government will complete 700 km of new lines, double 700 km of tracks and electrify 1,000 km. Banerjee also promised to set up a 'bridge factory' in Jammu & Kashmir as the railway project in the state involves a lot of bridges. For northeastern India, which she said was a priority area, the Railways will set up a diesel locomotive centre in Manipur, which will soon be connected to the railway network. The minister said the government wanted to ensure railway safety with the use of anti-collision devices and a 'fog safe' device. She said two incidents of sabotage and suspected sabotage killed 216 people, while the country's network of roads claim more than 1.30 lakh lives every year.
"Railways is passenger-friendly, safe and a cheap mode of transport. Rail fares are close to one-fourth that of road," she said.