Rail Budget: Short on steam but high on hope

NEW DELHI: Dinesh Trivedi’s budget projected one of the most dramatic recoveries ever in railway finances by suggesting that the operating ratio — which measures what percentage of revenues are consumed by routine expenses — will improve from 95% in this year to 84.9% in 2012-13.
This allowed the budget to also show a 10-fold jump in the surplus of railways from under Rs 1,500 crore in the revised estimates for the current year to over Rs 15,500 crore in 2012-13.It also meant that the minister could set aside Rs 5,000 crore for the capital fund compared to the measly Rs 942 crore this year and Rs 10,557 crore for development against Rs 550 crore.
The allocations, however, are predicted on revenue and expenditure projections that might prove a tad optimistic. On the revenue side, the budget projects an increase of over Rs 29,000 crore almost entirely thanks to higher traffic receipts. That is clearly the impact of the fare and freight hikes.
Passenger revenue is slated to go up by 25% at a time when the number of passengers travelling or the passenger-kilometres they are estimated to log up is projected to grow by just about 5%. In other words, the proposed fare hikes yield on average 20% extra.
Similarly, revenue from freight is estimated to increase by 30% over the revised estimates for the current year despite the fact that the increase in the freight volume is slated to rise by a mere 5.7%.
On the expenditure side, working expenses are expected to rise by under 12%, which may prove a considerable underestimate given that staff strength is supposed to increase by a lakh and fuel prices are highly volatile.
It is clear that the railways is looking at the general budget and borrowings for a boost to expansion and modernisation plans. Of an annual plan of Rs 60,100 crore, just about Rs 18,000 crore is to come from internal resources.
Of the 12th Plan target of investments of Rs 7.35 lakh crore, less than Rs 2 lakh crore will be funded by internally generated resources.
It does appear that the railways is going to be on borrowed time.
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