Anuradha Shukla/IANS
New Delhi, Jul 1: The impact of fare cuts, the unavoidable hike in wage bill, slower revenue growth and the freebies she has been promising will likely force a deficit budget from Railway Minister Mamata Banerjee Friday, senior officials said.
According to their estimates, the fare cuts announced by former railway minister Lalu Prasad and the impact of the Sixth Pay Commission may together result in an annualised loss of Rs.17,000 crore.
Along with that, if Banerjee decides to implement schemes like discounted passes for students and the elderly, along with improved quality of food for passengers and other amenities without fare hikes, the fiscal impact could be severe, they added.
One benchmark, which senior officials of the Railway Board maintain explains the constraints and the pressures on the ministry's finances, is the operating ratio - the money spent to earn Rs.100.
"The interim budget has already indicated that the operating ratio of the Indian Railways will be 88.3 percent this fiscal," said a senior official of the board, requesting anonymity.
"With the kind of freebies being talked about, without hiking passenger fares, this ratio could go even above 90 percent. This is bound to take a further toll on the surplus," the official told IANS.
Banerjee has already said she will overhaul the existing "Tatkal" (instant ticket) scheme and the tour packages of Indian Railway Catering and Tourism Corp and improve the food quality and passengers amenities without hurting the average passenger.
"Our aim is not just to generate surplus but also to take care of facilities and amenities to the masses," Banerjee had said during her first interaction with the media after taking office.
"There is a sharp degradation in the facilities given to the passengers with bad food quality, dirty trains and toilets and lack of drinking water and even the basic cleanliness at platforms," she had said.
"At the end of the day passengers must feel happy and satisfied with their train journey. My target is to continue to make railways a profitable venture but not at the cost of passenger amenities."
But there are constraints on resources.
"This year, freight earnings are down because of the slowdown. The fare cut is costing us Rs.3,000 crore. And on top of it, we have to shell out Rs.14,000 crore on account of the Sixth Pay Commission," said the Railway Board member.
In the previous year, the growth in freight earning was over eight percent on an average; this, however, slipped to three percent during the first three months this fiscal.
"There is a need to increase fares to improve food quality and other amenities. Further sops will add to revenue losses," the official said, adding the surplus of Rs.90,000 crore generated during the past five years could dry up fast.
In the interim budget presented Feb 13, former railway minister Lalu Prasad announced fare cuts of two percent and introduced 43 new routes and the plans of railways to invest Rs.35,900 crore in 2009.
Lalu Prasad had said budgetary support to the railways had declined from 53 percent to 29 percent since 2004 and it was investing over Rs.20,000 crore out of its internal resources to fund its projects.
The interim budget also projected cash surplus of Rs.19,320 crore for 2008-09 and Rs.18,847 crore this fiscal. Also the projection of gross traffic receipts for 2009-10 was at Rs.93,159 crore for the year 2009-10.