The railway budget

The Laloo ministry did manage to bring out the railways from the red to Rs 25000 crore over the last 4 years. Laudable it may seem, but there are still opportunities for improvement.

I read this article on rediff, the author made quite a few interesting comments on the budget.

India has amongst the lowest rail fares in the world. An Indian consumer's fare is about 50 per cent of what his Chinese counterpart pays. Well, we belong to a poor country, and a democracy is not expected to raise prices, with general elections next year

In sharp contrast, Indian Railway's cargo fares are among the highest. Even after the 5 per cent reduction announced by Lalu, cargo fares in India are costlier than China's, by at least 25 per cent.

Further, only about 35 to 40 per cent of all cargo traffic in India goes through the Railways. Railways' share has been falling consistently over the years.

In general, it takes lesser time for cargo to be transported over the train (discounting the delay at the yard) than by road. In addition, the road infrastructure is not too adequate for high speed traffic (and we do not even have high speed trailers!). So a reduction in cargo fares coupled with smoother services would only make railways more amiable to businesses. It would reduce costs, lower pollution levels and increase railways revenue.

I haven’t traveled in a train for quite some time now, but I wonder what advantage will a 4% reduction in AC-II tier fares will provide. If my fare to Delhi is some Rs 2000, a 4% reduction will translate to only Rs 80. I don’t see any reason for someone opting for the AC II tier to gain the meager amount (much more is spent on the way to the railway station).

We have a state monopoly when it comes to railways. If railways were partially privatized or a permission were given for FDI, it would only improve the quality of services (both on and off the tracks).