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Railway Budget 2009-10: Key extracts - Views on News from Equitymaster
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  • Feb 13, 2009

    Railway Budget 2009-10: Key extracts

    The interim budget activity kicked off today with the railway minister, Mr. Laloo Prasad Yadav, presenting the railway budget just a short while ago. Here are some of the key announcements made by the minister:

    • Ahead of the election, the minister has lowered passenger fares. Fares on mail/express and ordinary passenger trains will be reduced by one rupee for fares costing Rs 50 per passenger. Also fares of all mail/express and ordinary passenger trains will be reduced by 2% for the tickets costing more than Rs 50 per passenger.

    • On account of economic slowdown, passengers prefer to travel by railways AC first class, AC 2 tier, AC 3 tier and AC Chair Car instead of airways. To retain this increase in number of passengers the AC fares will also be reduced by 2%.

    • On the other hand, there is no change in freight rates.

    • An investment of Rs 379 bn has been envisaged for FY10. Of the total investment, nearly 25% would be drawn from General Revenue, 72% by way of Internal and extra Budgetary resources and balance funds would be supported by Central Road Fund.

    • The construction work on Eastern Dedicated Freight Corridor commenced last month, while work on Western Dedicated Freight Corridor (WDFC) will begin this month. The railways have completed successful trials of running electric locomotives with over head equipments at a height of about 7.5 meters, which will enable running of double sack containers on the electrified WDFC. Feasibility study to run bullet train between Delhi-Patna will soon be started.

    • To improve operation two new railway divisions would be set up at Bhagalpur and Thawe. 43 new trains to be introduced, extension in services of 14 trains and increase in frequency of 14 trains.

    • Operating ratio for FY10 is projected at 89% and cash surplus before dividend is expected to be in the range of Rs 188 bn.

    • Railways investment in FY09 stood at around RS 368 bn. The operating ratio of railways is projected at 88% and is expected to generate cash surplus before dividend to the tune of Rs 193 bn.

    • Production of wagons is expected to increase to 15,000 from 6,000 and diesel and electric locomotives from 202 to about 480. Modernization of network and technological up-gradation will result in 78% increase in capacity of goods rake and 22% increase in capacity of freight trains.

    • Freight earnings till December have registered growth of 14% and earnings from passenger traffic increased by 12%.

    • Railways would have to make additional provision of Rs 50 bn for salaries of railway employees and an additional Rs 35 bn for pension in light of implementation of the Sixth Pay Commission.

    • During the11th Five Year plan, railways propose to spend three times the amount allocated in the 10th Five Year Plan. The objective of the Rs 2,300 bn outlined investment is to increase the transport capacity of railways and to reduce unit cost of operations.

    • Over five years, railways would complete the work of gauge conversion, 1,800 kms of doubling and laying 1,100 km of new lines.

    • In the last five years, passengers services have been improved apart from ensuring lower fares and safety measures. Train services information is available from any corner of the country through 139 train enquiry services, reservation facilities have improved and facility to reserve tickets is also available at ATMs, petrol pump and post offices.

    • To provide better facilities railways are adopting modern technologies and forming strong alliances. Efforts to reduce accidents and to improve safety measures have paid off (number of consequential accidents are down to 194 in FY08 from 325 in FY04).



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