Speech of Shri Lalu Prasad

Introducing the Railway Budget 2007-08

On 26th February 2007

Budget Estimates 2007-08

86. Sir, I shall now deal with the Budget Estimates for 2007-08.

87. The target for freight loading for the year 2007-08 has been kept at 785 MT and for freight output at 516 billion tonne kms. Maintaining the double digit growth rate, the Budget Estimates for Freight, Passenger and other Coaching Earnings have been kept at Rs.46,943 crore, Rs 20,075 crore and Rs 2,200 crore respectively. Gross Traffic Earnings have been projected as Rs 71,218 crore, reflecting an increase of Rs.7,248 crore on the Revised Estimates for the current year.

88. Sir, provision for Ordinary Working Expenses for 2007-08 has been kept at Rs.42,687 crore, which is 12 per cent more than the Revised Estimates for 2006-07. Provision for Depreciation Reserve Fund has been pegged at Rs.5,496 crore and Pension Fund at Rs.8,683 crore. Thus total Working Expenses will be Rs.56,687 crore and Net Traffic Receipts Rs.14,631 crore. While Railways’ cash surplus before dividend is projected at Rs.21,578 crore, the targeted Operating Ratio is 79.6 per cent. Fund balances to end of the next financial year are estimated at Rs.16,170 crore. The memorandum on rate of dividend payable to General Revenues for 2007-08 has been submitted for consideration of the Railway Convention Committee. Dividend payable for 2007-08, assessed on the basis of the rate of dividend for 2006-07, is estimated at Rs.3,909 crore. In 2007-08, the Railways will not only meet this liability but will also discharge entire remaining deferred dividend liability of Rs.664 crore. In the Plan outlay for the next year, Rs.17,323 crore will be provided from internal resources.

Dynamic Pricing and Commercial Policy
89. The dynamic pricing policy for freight traffic introduced in the year 2006-07, has yielded encouraging results. Therefore, this year we have made a policy for reducing fares at varying rates, for all services of AC Ist class and AC II tier class and new design coaches for AC III tier and AC Chair Car, during peak and non-peak seasons, in popular and unpopular trains. Similarly commercial policy for freight transportation has also been made dynamic and different wharfage rates have been prescribed for busy and non busy goods terminals.

Passenger Services
90. Sir, I had announced a reduction of one rupee per passenger in the fares of second class in August 2005. Despite reduction in fares, there has been a growth of 14% in passenger earnings. The boundless affection and patronage of the people has helped Railways stage a turnaround. In recognition of this I announce a reduction of one rupee per passenger in the daily ticket fares of non suburban ordinary passenger and non superfast mail-express trains. Sir,

Daur-e- mehngai mein bhi rail sasti rakhi,
par kamai mein koi kamee na rakhi

91. Last year we had increased the speed of some trains and upgraded them to super fast trains. On popular demand, I have decided that the super fast surcharge levied on second class tickets for super fast trains shall be reduced by 20 per cent.

92. Sir, we have designed new Sleeper class, AC Chair Car and AC 3 tier Coaches. From 2007-08, only these high capacity coaches will be manufactured. We have decided to share a portion of the benefits of this enhanced capacity with our customers. In the newly designed sleeper class coach there will be a general reduction in fare by 4 per cent. This reduction will be applicable during both lean and peak seasons. The fares for the newly designed AC-3 tier and AC chair car coaches would be reduced by 8 per cent in lean season and 4 per cent in peak season. In popular trains, this reduction will be uniformly 4 per cent, throughout the year.

93. Fares for AC I class will be reduced by 6 per cent in the lean season and 3 per cent in the peak season. The fare will be reduced uniformly throughout the year by 3 per cent in popular trains.

94. Fares for AC-2 tier class will be reduced by 2 per cent during the peak season and 4 per cent during the lean season. The fares will be reduced uniformly throughout the year by 2 per cent in popular trains.

95. Sir, thousands of people come to Mumbai from outside for tourism and various other purposes For the benefit of such people, we have decided to issue tourist tickets valid for, one, three and five days on the Mumbai Suburban Service, as a pilot project. Such ticket holders will be able to travel any number of times, from any station to any station on the suburban sections of Central and Western Railways of Mumbai. As a result of this, passengers will not have to stand in a queue again and again to buy tickets.

96. The scheme of booking e-ticket through internet from home has become very popular. To further encourage e-ticket usage, we have decided to reduce the per e-ticket charge for Sleeper class and AC classes e-tickets from Rs.25 to Rs.15 and Rs.40 to Rs.20 respectively. Besides this minimum charge there will be an additional charge of Rs.5 per passenger for booking of every additional passenger subject to the maximum charges for one ticket being Rs.25 in sleeper class and Rs.40 for AC classes.

Parcel and Luggage Services
97. Sir, the policy to lease brake vans and parcel vans, through open tenders, at scheduled or lower rates, has borne good results. However, there are several trains in which, during last year, less than 60 per cent of SLR capacity was utilized and where SLRs could not be leased at scheduled or higher parcel rates in spite of inviting open tenders. Taking the rationalization process further, we have decided that the scheduled parcel rates for all such trains will be downgraded to the next lower class. If any train is leased out at scheduled rates in one direction but no lease offer is received, even after inviting open tenders, in the return direction, and its utilization is less than 60% of its capacity, then its class will be downgraded to the next lower class in that direction. This will bring about a reduction in parcel booking rates in less popular trains. A review of parcel and luggage rates will be completed in the first two months of each financial year i.e. 31st May.

98. Sir, under the present luggage rates structure, luggage rates for all trains are 20 per cent higher than the parcel rates applicable for Rajdhani trains. It is worth mentioning that the parcel rates for Rajdhani Express trains are three times the parcel rates for ordinary passenger trains. Rationalizing these luggage rates, we have decided that in trains where in spite of calling open tenders at scheduled rates, offers for leasing of SLRs have not been received and where utilization of capacity is less than 60 per cent, the luggage and parcel booking rates will be the same. As a result of this decision luggage rates in ordinary passenger and less popular mail and express trains will be reduced up to 60 per cent.

Freight Business
99. Sir, to maintain the unprecedented growth in freight transportation, I announce the following reduction and discount schemes.

100. Sir, last year I had reduced the classification for diesel and petrol from class 240 to 220 thereby reducing the tariff by about 9 per cent. Taking the rationalization process further, I propose to reduce the highest class from 220 to 210. This will bring down the freight for diesel, petrol and ammonia etc, by about 5 per cent.

101. On the demand of mineral based industries like steel, cement etc., freight rates for transportation of all minerals including iron ore and limestone will be charged at Class 160 in place of 170. This will reduce the freight rates for these commodities by about 6 percent.

Empty Flow Direction Freight Discount Scheme
102. Our goods trains run loaded in one direction and mostly run empty in the return direction. The percentage of empty running is worse in the case of open wagons. Last year we had announced a freight discount of 30 per cent during lean season and 20 per cent during peak season on incremental loading in the empty flow direction. We have made several important changes to make this policy more effective. Since railways face the problem of empty running of wagons throughout the year, we have decided that in place of 20%, empty flow discount of 30%, will be given during the peak season also. This discount will apply to both open and covered wagons in both peak and lean season for traffic with a lead of more than 700 kms. General Managers of Zonal Railways will be delegated powers to offer this discount on traffic with a lead of less than 700 kms also, unnder certain conditions.

103. Presently, bagged consignments of wheat, fertilizers and cement loaded in open wagons are given a discount of 20, 30 and 15 per cent respectively. This discount is given in both loaded and empty flow directions. We have now decided that in cases of incremental loading of bagged consignments in open wagons in empty flow directions an additional Empty Flow discount at the rate of 30 per cent will be given but after giving both these discounts, the minimum charges payable will not be lower than freight payable at Class LR-3. Thus the discount for incremental loading of cement, wheat and fertilizers in bags, in empty flow direction will increase up to about 40 percent. I am confident that by giving a such a heavy discount we will be able to attract FCI and various fertilizers and cement companies to load in open wagons returning empty. The calculation of incremental loading will be done on the basis of type of wagon.

104. In empty flow direction, in addition to block rake loading, facility will be given for loading of less than train load traffic. In open wagon rakes 20 per cent discount will be given for loading 31 to 57 wagons and 10 per cent discount will be given for loading 20 to 30 wagons. In covered wagon rakes 20% discount will be given for loading of 31 to 39 wagons and 10% discount will be given for loading 20 to 30 wagons. Permission to load less than 20 wagons will not be given during the peak season. However in the non-peak season from July to September facility to load 15 to 19 wagons would be available but no discount would be given.

105. At present this discount is not available on transportation of coal, coke and all types of raw material meant for steel plants. With a view point of making this discount more brad based it is proposed to extend this discount to all commodities except coal, coke and iron ore.

Two Leg Freight Discount Scheme
106. It has also been decided that if train load traffic is offered in covered wagons for both up and down directions, then, a discount of 20 per cent in lean season and 15 per cent in peak season would be given for traffic in both directions. This discount will not be available for commodities placed in LR-1 or lower classes.

Incremental Freight Discount Scheme for Non-peak Season
107. We have been successful in tackling effectively the stabling of empty trains during the lean season due to the 15 per cent incremental freight discount. Further liberalizing this scheme, we have decided that this discount shall be available on all commodities except for all types of coal, coke, iron ore and commodities placed in class 120 or below during the lean season. The maximum distance between two unloading points will be increased from 200 to 400 kms for the immensely popular two point rake scheme during lean season.

Commodity Based Freight Policy
108. Requirements and expectations of customers for specific commodities are different. Therefore, we have decided to develop a commodity based tariff policy to better address the needs of our customers for major commodities transported by rail and to provide a stronger base to railway’s competitive capabilities. We will introduce this new policy on an experimental basis from 1st April through an exclusive package for cement.

Dynamic Commercial Policy
109. Last year, I had announced a dynamic pricing policy for freight loading which has yielded the expected results. Taking this process further, we have decided to make the commercial policy also dynamic.

Dynamic Wharfage Rate
110. At present the wharfage rates and free time are the same at all terminals whether small or big, busy or unused. We have decided to increase free time allowed for loading and unloading and to reduce wharfage rates at under utilized small terminals.

Dynamic Demurrage Rate
111. Currently demurrage rates are uniform throughout the year though utilization of wagons is more during the peak season and less during non-peak season. We have, therefore, decided that during non-peak period on an experimental basis, at a few terminals, one hour extra free time will be given depending on the state of usage of the terminals.

Tariff Policy based on Traffic Route
112. More than half of the Railways traffic runs on high density routes. Due to lack of traffic, two-thirds of Railways network is being utilized at far less than its capacity. Therefore, we have decided that goods traffic originating and terminating on these underutilized routes will be given a discount on normal freight rates. Detailed guidelines in this regard will be issued shortly.

Liberalization of Wagon Investment Scheme
113. At present customers subscribing to wagon investment scheme and container train licensees have to buy their own wagons. It is proposed to allow any person to avail the benefit of these schemes by procuring or leasing wagons or containers. Currently wagon investment scheme is limited to open and covered wagons. In order to expand the scope of the scheme, we have decided to extend the benefits of the wagon investment scheme for all types of general purpose wagon as well as special purpose wagons suitable for specific commodities. Proposals of charging of freight, on the basis of per train kilometre instead of per tonne kilometre, for wagons meant for lighter commodities like motor vehicles will also be considered.

Conclusion
114. Sir, the Railways is fast emerging as a dynamic and vibrant entity. The guidance, encouragement and support of the Hon’ble Prime Minister has helped the Railways grow from strength to strength. The unstinted support given by the members of the House to our policies and the faith they have expressed in the railway family has boosted our morale and self confidence.

Har saal nayaa saal tarakki ka, pragati ka,
Aapka hai saath to phir ye safar jaari rahega.

115. With these words, Sir, I commend the Railway Budget 2007-08.

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