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February 17, 1999
Increased budgetary allocation for Railways unlikely
P K Chakravarty in New Delhi
The Railway Budget for 1999-2000 to be presented to the Lok Sabha on February 25 by Railway Minister Nitish Kumar for the second successive year is likely to increase fares substantially. For the government is unlikely to enhance budgetary support to help the Railways continue its various social objectives.
The finance ministry has not indicated increased budgetary support to the Railways in spite of unanimous demand of members of Parliament belonging to various parties for enhancing it by 30 per cent.
The ministry of railways is also pleading with the government to come to its rescue. As it might not be possible for the finance ministry to accede to the demand in view of the financial crunch being faced by the Union government, the Railways would have to fend for itself, sources said.
Even as the Railways finds it difficult to mop up additional revenue because of the sharp fall in the transportation of bulk traffic from the core sector, including coal, the demands from the states and various political parties are mounting.
It is now impossible for the Railways to achieve the target for loading 450 million tonnes of freight traffic. The Railways would pat itself if it could carry 430 million tonnes of freight traffic by the end of March due to vigorous marketing strategy launched for this purpose. The loss of earnings from the core sector due to less offerings of such bulk traffic as projected in the current year's Budget was estimated at Rs 140 billion.
Besides budgetary support, which is unlikely to be increased substantially, the Railways cannot depend indefinitely on market borrowings and the private sector.
For market borrowings, regular dividends have to be paid to the investors and the Railways have to maintain a huge infrastructure and launch a sustained publicity drive to attract investment.
This is becoming expensive and the Railways must avoid this to prevent itself from falling in the debt trap, the sources said.
Despite several incentives, private investment in the development of the Railways had not been substantial. One of the major reasons for this was that investment in the sector is long-term and quick returns on investment are not assured.
According to indications available from the Railway Board, where the draft Budget is being prepared, Railway Minister Nitish Kumar will have to walk a tightrope while finalising the Railway Budget.
He has to keep in mind that assembly elections are due in ten states later this year and all political parties, including the Bharatiya Janata Party and its allies, are aspiring for power in the states. Public opinion will go against the BJP and its allies, if there is a steep hike in fares and freight causing inflation.
Modernisation of the track, signalling, telecommunication systems, amenities for passengers, guage conversion and doubling projects are on the priority list to be announced in the Railway Budget. Therefore, the mandarins in the Railway Board are trying to find out ways and means to mobilise additional revenue to maintain the railway network and update it to meet the challenge in the coming century, the sources said.
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