NEW DELHI, 7 July 2004 — Railway Minister Lalu Prasad yesterday presented a populist budget for Asia’s biggest rail network, leaving train fares and freight charges unchanged. The business community responded positively with the Bombay Stock Exchange’s 30-share index jumping 1.75 percent. The Sensex closed at 4,928.59 points.
With the opposition boycotting the proceedings, Lalu was spared the usual heckling. He put expenditure in the year to March 2005 at 414 billion rupees, set against passenger revenues of 139 billion rupees and freight earnings of 287 billion rupees.
The expected surplus would be used to modernize the outdated railways and enhance travel safety, Lalu said.
The minister also announced the introduction of 15 new trains on existing routes.
Populist measures include a 75 percent fare concession for widows of defense personnel and hemophilia patients. Full concession would be provided to unemployed youths attending central government job interviews. Those escorting deaf and dumb persons will pay half fare.
Extending the humane touch to porters, Lalu announced that shelters would be constructed for them at railway stations. Their spouses will enjoy one set of privilege pass to travel to any station from the station they work at.
Lalu’s concern for rural economy will not be confined to encouraging the use of disposable “kulhads”, or earthen cups, for tea. He said wholesome milk and milk products sourced from dairy units in the cooperative sector would be made available at all catering outlets. Besides, “Village-on-Wheels” trains will be introduced for barefoot tourists and the railways will use handloom and khadi for upholstery.
The railway budget, which traditionally serves as an indicator of the tone to be taken in the main national budget — to be presented in Parliament on Thursday — was warmly received by financial markets.
“It is very positive... the market was expecting an increase in the freight rates of commodities such as steel and cement,” said Prakash Lala, director of Centaur capital services. “People are taking a cue from the railway budget.”
Hefty fare hikes had been expected but the minister surprised everyone by leaving them untouched. “I am pro-people... the railway budget is pro-poor, pro-middle class, pro-rich and pro-business — it does not tax any one class at the cost of the other,” he told reporters after presenting the budget.
Tampering with fares carries a significant political risk in India, which boasts the world’s second largest railway network carrying 13 million passengers every day.
Analysts noted that after a closely fought national election, the new Congress-led government might be cautious given that five state elections are due in the coming months.
The populist minister announced a 10 percent rebate on the transport of heavy machinery across India, a surprise move which immediately lifted market sentiment.
“The railways’ share of freight traffic has declined from 80 percent in 1960 to 40 percent in the late-1990s,” Yadav told Parliament.
He said that “given stable freight rates” he expected goods transported by rail to rise to 580 million tons from 540 million tons the previous year.
The rail network is still one of India’s cheapest ways of transporting goods across the country although it is notorious for delays, theft and accidents.
“The biggest challenge the railways is faced with is the safe transit of passengers,” said Lalu, who went on to assure Parliament that safety in rail operations would be accorded “the highest priority”.
While leaving freight rates unchanged, the minister decided to reduce the total number of rate scales for parcels from four to three and also charge 7.1 percent higher for the super fast Rajdhani Express trains to net an additional revenue of 500 million rupees in the remaining period of the current fiscal year.
