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Budget 2005-2006 » Railway Minister's Budget Speech
Mr. Speaker Sir,
I rise to present the Budget Estimates for 2005-06 for the Indian
Railways. I am presenting this budget at a point in time when the
Indian economy reflects a vibrant growth. The Tenth Plan
envisages an economic growth of eight per cent. This requires
significant investment in infrastructure, of which railways are
important and integral part, through larger public and private
investment. This also needs greater efficiency in these sectors
and sound fiscal management for financial viability.
2. Indian Railways have a critical role in ensuring the continued economic development of the country. We have drawn up an ambitious plan for meeting the increasing and emerging demands of the economy through the provision of world-class infrastructure. We will work not only towards streamlining the passenger services further and ensuring a palpable improvement in the quality of passenger services but also initiate a gamut of commercial, operational and investment – oriented initiatives in the freight sector thereby doing everything possible to improve Railways’ share in the transport sector. I shall outline these policy decisions in the course of my speech.
REVIEW OF PHYSICAL AND FINANCIAL PERFORMANCE IN 2004-05
3. Sir, when I presented the first railway budget of the United Progressive Alliance Government, the so called intelligentsia had criticized it as a populist one since I had not increased railway fares and freight. I have immense pleasure in reporting to this August House that with the untiring efforts of lakhs of railway employees, the physical as well as financial performance of Railways in the first nine months of the current financial year has been excellent, thereby belying this criticism. On the freight front Indian Railways have transported 438.36 million tonnes which is 31.21 million tonnes more than the traffic lifted during the corresponding period of the last year. This implies a growth of 7.67 per cent over last year. Keeping this trend in mind, the revised target for loading has been raised from 580 million tonnes to 600 million tonnes and the revised freight earnings have also been increased from Rs 28,745 cr. to Rs 30,450 cr. For many decades the railways share of the freight market has been progressively reducing. Sir, it is a matter of pride for every railwayperson that this year, by registering a freight growth that surpasses the growth of economy, not only have the railways regained some market share, but will also be surpassing the Tenth Plan target of 396 billion tonne kilometres of the terminal year 2006-07 in this year itself, that is two years ahead of target. Sir, the current year’s expected incremental freight loading of 43 mt is the highest achieved so far. Originating passenger traffic has also registered a growth of around six percent as compared to the budget target of 3%. The total earnings to end of December 04, which stand at Rs.33,900 cr., represent an 8.3 percent growth over the last year as against a growth of 4.1% registered in the previous financial year. The Revised Estimates have been framed keeping this trend in mind. Total earnings of Revised Estimates at Rs 46,635 cr are Rs 1,838 cr higher as compared to Budget Estimates.
4.Concerted efforts of the Ministry of Railways have also resulted in a two-fold increase in realisation of outstanding dues over the previous year. With the anticipated clearance of Rs 150 cr, the budgeted gross traffic receipts of Rs 44,902 cr will increase to Rs 46,785 cr.
5.The Ordinary Working Expenses are likely to increase by Rs 400 cr., mainly due to the steep post budgetary increase in fuel prices and the Revised Estimates for these are placed at Rs. 33,260 cr as against Rs. 32,860 cr in the Budget Estimates.
6. While the gross traffic receipts are anticipated to increase by Rs. 1883 cr over the Budget Estimates, the working expenses are expected to grow by only Rs. 400 cr, resulting in a significant increase in the internal generation during the current fiscal. With this the ratio of the ordinary working expenses and pension to the gross traffic receipts, i.e., “Working Ratio”, is expected to be around 85%. Despite the appropriation to Depreciation Reserve Fund being Rs. 395 cr higher than budgeted, the Operating Ratio is expected to be 91.2% against the budgeted 92.6%.
7.Hon’ble members have been expressing concern about depleting balances in the Railway funds. It is a matter of satisfaction that despite withdrawals in the current year being higher compared to previous years, the fund balances are expected to close with a healthy figure of Rs 6963 cr.
8. In comparison with earlier years our physical and financial performance has been praiseworthy. However, we will not remain content with this.
“Uthna
hai aur bhi upar, hai uchaiana pukartin
Hai apar kshmtayein,aashaein tumhe nihartin”
Several policy initiatives which I shall spell out in the course of my speech, have been taken with a view to ensuring that the economy and populace are able to reap the full benefits of Railways’ vast potential.
FREIGHT BUSINESS INITIATIVES
9.Sir, policy decisions on several commercial, operating and investment related aspects have been taken with a view to bringing about an increase in the average speed of freight trains and reduction of detention to rolling stock at terminals which I would like to mention briefly.
Strategy to improve wagon availability and wagon utilization
10.Sir, despite no significant augmentation in the number of wagons last year, considerable increase in loading has been possible due to improvements in the wagon turn round. The latter is expected to improve from seven last year to about six in year 2004-05. By taking up measures for improvements in this area on a war footing it is expected to bring the wagon turn round down to five days in the near future.
11.The Preferential Tariff Schedule for supply of wagons has been rationalised and simplified. Highest priority “A” will be accorded to the Military traffic for Defence movement. Priority “B” shall be accorded to the emergency relief material for natural calamities and traffic sponsored by the Central Government agencies. Approved programmed traffic shall be accorded “C” priority. All other commodities will be moved under priority “D”. In every category a higher priority within the same class of priority shall be accorded to the traffic offered by the customers adopting Engine-on-Load scheme, Wagon Investment Scheme or full rake sidings with mechanized round-the-clock working.
12.In order to ensure un-interrupted movement of goods trains and to have better turn round of wagons, it is proposed to electrify diesel sidings located on electrified sections at Railways’ cost, where heavy detentions occur and a prescribed number of rakes is handled per month.
Engine-on-Load
13.As the House is aware, “Engine-on-Load” (EOL) scheme, was announced in the last Budget, wherein the train engine waits during loading and unloading operations to ensure faster release and better availability of wagons. After consultation with customers, the terms and conditions have been further liberalized. The permissible free time for loading is being increased from three hours to four hours for bulk commodities and from five hours to six hours for bagged consignments. It has also been decided to give a cash incentive by way of encashment of the credit hours available at the end of every quarter to be adjusted as a rebate in the freight payable in the following quarter. It has been decided that higher preference, within the same class of priority, will be accorded in supply of rakes to the EOL customers. The EOL scheme is also being extended to selected goods sheds and for customers not having their own private sidings.
Terminal Incentive Scheme
14.It is proposed to introduce a cash incentive scheme for such freight customers who help the railways in reducing the terminal detention through investments in infrastructure for mechanized loading and unloading, round-the-clock working and improvements in yard lay out in their sidings. The “Terminal Incentive Scheme” shall be formulated in consultation with industry and after getting all related aspects examined by a professional agency.
15.To bring about a qualitative improvement in freight train examination and wagons maintenance practices, infrastructural facilities will be upgraded at freight train examination centres, particularly those for close circuit rakes. In the coming year 20 such examination centres will be upgraded. With this, detentions during examination of freight trains will be reduced, quality of train examinations will be improved and safety will be enhanced. Substantially longer intervals will be provided between two successive train examinations by providing extended run of freight trains after every examination and for most close circuit rakes there will be no need for re-examination upto 6000 kms.
16.It is proposed to rationalise the rules relating to demurrage and wharfage and the time given for loading and unloading. Accordingly, it has been decided that all goods sheds and sidings shall have uniform working hours and business hours. Customers are being encouraged to undertake loading and unloading operations through mechanized handling equipment and adopt round-the-clock working. As an incentive, only fifty percent of the actual time taken for loading or unloading operation from 22.00 hours to 06.00 hours will be reckoned for calculation of free time for the purpose of demurrage.
17. Unloading from wagons is sometimes held up due to delayed removal of consignments from an earlier rake lying on the ground. In order to encourage expeditious removal of the goods, it has been decided that a grace period of two hours beyond the prescribed free time for unloading of wagons shall be permitted if the entire consignment from the rake is removed from the goods sheds within the extended free time.
Electronic Payment Gateway
18.I am happy to advise that the pilot project for setting up Electronic Payment Gateway for freight, which I had proposed during the last Railway Budget, has been implemented for Badarpur Thermal Power Station in January’ 2005 and a clearance of Rs. 110 crores has been effected from their outstanding dues. This facility will be extended to all major customers during the coming years, who opt for the same.
Public - Private Partnership
19.Several public-private partnership initiatives are being taken to garner resources through non-traditional methods for the modernization and development of the railways and to provide enhanced facilities for users. Prominent amongst these are private sidings, commercial utilization of surplus railway land through construction of modern railway stations with provision of additional passenger amenities and logistics parks under the aegis of Rail Land Development Authority, initiatives related to parcel, utilization of optic fibre cable network of RailTel, computerized train enquiry system and wagon investment scheme, which will be covered in the course of my speech.
Sidings
20. In order to enhance the rail share in transportation, it is necessary that freight customers are encouraged to develop their private sidings. It is proposed that the Railways shall share the cost of a new railway siding if the industry comes up with a long-term commitment of traffic; say for 10 years or more. Under this arrangement, the cost of the removable super structure including the track, sleepers, fastening etc. and the overhead electric equipment shall be borne by the railways. The capital cost of all traffic facilities such as ‘Y’ connection, additional lines at the serving station, crossing stations, patch doubling of the section etc. shall be fully borne by the railways. The siding owners will be required to bear the cost of the land, earthwork and the sub structure of the track.
21. It has further been decided that in all private sidings other than Engine on load only, barring the cost of one commercial staff per shift, the Railways would bear the cost of all other Railway staff. The cost of all staff at engine on load sidings will be borne by the Railways.
Rail Land Development Authority (RLDA)
22. To ensure the commercial utilisation of surplus railway land and air space I had, during the last Parliament session, presented a Railway (Amendment) Bill, 2004 in the Rajya Sabha, for setting up of RLDA. This authority will, through public-private participation, develop surplus land adjoining railway stations and goods sheds for constructing warehouses and logistics parks. It would also generate additional resources for the development of railways. Sir, in the coming years we propose, with the help of this Authority, to develop metro stations into world class modern stations and extend passenger amenities through construction of food plazas, shopping malls, etc. on vacant land. In the year 2005-06, all efforts will be made to complete the process relating to sanction of an action plan for converting New Delhi Railway Station into such a modern world class station.
Integrated Warehouse Complexes
23. Indian Railways have entered into a Memorandum of Understanding with Central Warehousing Corporation (CWC) who will develop integrated warehouse complexes at 22 locations. A scheme for development of integrated warehouse complex by private sector has also been approved with a view to encourage public-private partnerships as per this model. It will provide a single window service to the customers for providing value added service of forwarding, handling, warehousing and road bridging.
RailTel Corporation of India Limited
24.Sir, the optic fibre network of RailTel Corporation has now grown to 26,000 route kilometres (rkms) and is likely to reach 40,000 rkms by 2008. During the current financial year RailTel has completed connectivity of four metros and four mini metros. This apart, the present network already provides connectivity to 180 important cities and 1750 other railway stations. The telecommunication and safety requirements of railways are being satisfactorily met by this network. Once the ongoing process of upgrading the capacity of their OFC network from STM-4 to STM-16 over 23,000 rkms is completed in June 2005, RailTel’s revenue earning capability will increase beyond expectations. RailTel will make every effort to exploit this vast network through public private partnership by means of joint venture, either through leasing or channel partner and provide various broadband services such as internet, voice telephony on internet, cable TV, national long distance telephony in urban as well as rural areas.
Container Traffic
25With the globalization of the Indian economy and spurt in imports and exports, the container traffic is expected to grow exponentially. It has been assessed that the growth will be of the order of 15%. In order to meet the growing demand for container trains, organizations other than Container Corporation of India will also be considered for movement of container traffic.
26.Capacity constraints on the existing routes necessitate introduction of double stack container freight trains. It is proposed to introduce double stack container trains during the next two years on one of the identified routes connecting North India with Gujarat ports, based on cost economics.
PARCEL BUSINESS - INITIATIVES
27. In order to provide value added services for transportation of parcels, railways have been leasing the parcel space in the front SLR coaches of passenger carrying trains by inviting bids through open tenders. It is proposed to introduce additional leasing of one of the two compartments in the rear SLR coaches of certain nominated Mail/Express trains also to attract more traffic. It is also proposed to lease out the vacant compartment of guard in the front SLR coach to courier services for carriage of small packages.
28. Currently the parcel space in SLRs of many Mail/Express and passenger trains is underutilized and in some trains it is even below fifty percent. In order to attract traffic in such trains short-term lease for a period of one year shall be introduced. The reserve price for such leasing shall also be lower, keeping in view the past utilization of parcel space by such trains. Leasing of parcel space by ordinary passenger trains shall also be permitted for intermediate stations, if there is adequate demand between different pairs of stations covered by the train.
PASSENGER BUSINESS – INITIATIVES AND AMENITIES
29. In the ensuing year I propose a number of steps for providing new, modern and improved facilities to the passengers. Some of these are detailed below:
Computerized Train Enquiry System
30.Sir, passengers often complain that telephone lines pertaining to railway enquiry remain always busy. An attempt has, therefore, been made to expand its reach up to village level by modernizing the train enquiry system and opening call centres at Patna. Under this initiative, people from any corner of Bihar can enquire about arrival and departure of trains, reservation status, fare, concessions, etc., by dialling a universal telephone number 139 at local call rates. To ensure that the lines do not remain busy, depending upon the need, 200 to 500 lines are used in a call centre so that a large number of people can access the facility of enquiry simultaneously. Considering the unprecedented success of this initiative, I am happy to inform the House that I have decided to extend this facility throughout the country by the end of 2005-06 so that not only urban but rural people are also able to get the desired information instantly by dialling a universal number 139 at local call rates.
Round the clock Internet booking.
31.The facility of booking tickets through Internet, which was started for cell-phones in the current year will soon be available on landline phones also. Presently booking of rail tickets on the Internet is restricted from 8 a.m. to 10 p.m. With effect from 15th March 2005 this facility will be available from 4.00 a.m. to 11.30 p.m. without a break.
Reservation status in advance
32. At present, waitlisted passengers do not know their status till the preparation of chart, which is normally done only about four hours before train departure. This time is considered too short for a person to finalise his journey plans. Therefore, continuous updation of the waiting list will now be made possible through suitable modifications in the passenger reservation system.
Display of vacant berth position
33.Along with the reservation chart, it is proposed to display vacancy position charts in all reserved coaches and on the platform so that waitlisted passengers can have information about vacant berths in various legs of journeys which will further enable transparency in their allotment. Wherever possible, this data would be linked to the current booking counters, so that vacant berths can be released.
Expansion of IT for customer satisfaction
34.Sir, it is proposed to launch a pilot scheme for Mumbai suburban passengers to renew their season tickets on Internet and have it home-delivered on the lines of Internet ticketing for reserved category. This will provide relief for a large number of season ticket holders and ease congestion at the booking counters.
35.The Passenger Reservation System (PRS) has already been installed at 1,163 locations all over the country. Another 152 locations have been sanctioned and are at various stages of completion. While the majority of District Headquarters have been provided with PRS facilities, it is proposed to cover the remaining District Headquarters, 100 in number, with these facilities within the next two years. 45 such locations will be taken up in 2005-06 subject to provision of space by the district authorities as per extant policy.
36. The Unreserved Ticketing System (UTS) has already been provided at 108 locations in 14 Zonal Railways. A total of 120 locations are likely to be covered by the end of the financial year. It will be further expanded by over 300 locations during the year 2005-06.
IT STEPS ORIENTED TOWARDS MIS
37.Indian Railways will move towards greater deployment of information technology so as to improve the process of planning, monitoring and decision making, reduce operating expense through a more efficient utilisation of rolling stock and to enhance the public image of the railways. I would like to briefly mention some of the new initiatives being taken.
38.It is proposed to develop a Management Information System through a data warehouse developed from the Unreserved Ticketing System (UTS), Passenger Reservation System (PRS), and Freight Operations Information System (FOIS) on the Indian Railways. The proposed data warehouse will significantly boost the efficiency and effectiveness of the planning, control and monitoring processes.
39.At present control over movement of trains is carried out through manual charting by the staff in most of the divisional control offices. Computerization of control charting will be taken up on Indian Railways during 2005-06. This will not only enable charting to be carried out with greater ease but will also result in more effective control over movement. Simultaneously, useful information on real time basis shall be made available to passengers on line through the NTES and call centres. The Control Charting system would be implemented on 15 divisions in the coming year.
40. A computerized Crew Management System is already running in a few divisions on different railways. On the basis of the experience gained from these, it is proposed to develop and implement a unified crew management system. This system will streamline the management of train crews, optimising manning of trains, and providing running staff with rational working hours.
41.COIS Punctuality Module is already available at most of the Divisional and Zonal Headquarters i.e. 80 locations approximately. The timetable module of COIS is under development and a central timetable date base has been built up. This will be web-enabled during the year 2005-06.
42.During the year 2005-06, computerization of Railway Claims Tribunals, Goods Refund Offices and Subsidiary Claim Offices will be undertaken on similar lines as those of Claim Offices. Computerisation of goods refund offices will provide facility of online registration of goods refund cases and of checking the status of these cases from the Railways. It is anticipated that the web-enabled Claims Management System would help in reducing the average time taken for claim settlement.
INTEGRATED RAILWAY MODERNISATION PLAN (IRMP)
43.Sir, with above new initiatives and by formulating an Integrated Railway Modernization Plan we have a dream of making the Indian Railways as the best Railway system in the world.
“Sirf hungama khara karna mera maksad nahin, Meri koshish hai ki ye surat badalni chahiye”
44.With a view to develop Indian Railways as a world class railway, an Integrated Railways Modernisation Plan spanning five years upto 2010 has been formulated. Under this plan, in the passenger segment, running of 150 kmph trains on New Delhi- Howrah and New Delhi-Chennai routes is envisaged. The freight business segment envisages running of freight trains at 100 kmph on the golden quadrilateral and its diagonals, introduction of higher axle load, double stack containers and Roll-on-Roll-Off wagons on the identified routes, etc.
45. The tare weight of the wagons currently being used limits the freight loading of the Railways. With a view to increasing the loading capacity of each wagon by four tonnes, it is proposed to introduce lightweight, corrosion resistant aluminium wagons during the period of the modernisation plan.
46. Other modernisation initiatives also include track modernisation and its maintenance practices, modernisation of Bridge Management System, signalling and telecommunication system, mechanical and electrical system and the Disaster Management System. The total expenditure envisaged for execution of the identified items in the IRMP is about Rs. 24,000 crore.
ACCOUNTING INITIATIVES
47. The existing Accounting system on Indian Railways is time tested and provides a reasonable base for capture of data and production of financial statements in accordance with reporting requirements of Government. However, recent trends witnessed worldwide lay stress on uniform accounting standards and deployment of information technology assisted accounting system with greater transparency in financial reporting of the organization. The Railways have accordingly set in motion an Accounting Reforms process to meet the emerging business needs.
48.In the Railway accounting system certain accounting heads are maintained to record transactions on accrual basis so as to establish a link between commercial accounts and government accounts. Also, revenue and capital expenses are classified under different heads. However, the total amount of lease charges paid to Indian Railway Finance Corporation for rolling stock leased by it is treated as a revenue expenditure whereas this amount includes both interest and principal repayment components, which are in the nature of revenue and capital expenditure, respectively. Therefore, it is proposed to modify this accounting system, following due procedures, in such a way that the true nature of such transactions and contribution of such assets to railway revenues can be ascertained and the accounting is in line with the generally accepted and standard accounting practices followed for lease finance.
49.Besides, there is a need to go into the capital structure of the Railways particularly with reference to the contribution to Depreciation Reserve Fund on a scientific basis, identification of unproductive and redundant capital assets and the need for a policy of amortization. I have, therefore, directed the Ministry to draw up a suitable action plan so as to rationalize the capital structure of the Indian Railways.
50.In the context of the ongoing accounting reforms and the contemplated capital restructuring initiatives, it is proposed to establish a Chair for studies in railway finance at one of the Indian Institutes of Management. This will be a fitting commemoration of the platinum jubilee celebrations of the Indian Railway Accounts Service.
