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Friday, February 24, 2006 

Rail Budget: A Fresh Approach

Being a regular and vocal critic of Lalu Prasad Yadav, I was extremely surprised (albeit pleasantly) by the railway budget announced by him yesterday. The budget went against all conventional rail budgets, and broke many an established norm of the regular budgeting policy. Check out the salient features of the rail budget here.

Year after year it was seen that first class fares were increased to subsidise the fares of the lower classes, in keeping with the socialist traditions of the country. This resulted in the first class fares exceeding that of airplanes. Automatically, passengers preferred traveling by air whenever it was possible. However this time Lalu announced that he was competing with airlines for the passengers, cutting AC-I fares by 18% & AC-II fares by 10%. It is yet to be seen if this will have the desired effect, as air-travel saves much more time.

Another area of marked improvement was the freight charges. Although the prices of freight were reduced, some smart marketing, buoyed by a booming economy helped increase volumes substantially. The freight trains a.k.a. the bread-earners of the railways thus ensured a profit of Rs.11280 crore for the railways. This has prompted the rail minister to setup double-decker freight carriages and freight corridors. He has also simplified the freight pricing policy. To reduce the effect of increasing oil prices, freight rates for diesel and petrol were reduced by 8%

Also, announced was the setting up of Garibraths, unreserved AC trains for poor people. The fares for the same will be 25% lower than 3-tier AC class. Still the fares are expected to be 15% above sleeper class. It may not help the poorest of poor, but the lower middle class making emergency travel will be benefited.

Lalu has also promised a drastic change in the conditions of railway stations, allowing ATMs, cybercafés and food plazas for all major stations. In addition, e-ticketing cost has been reduced. All this comes from the most vocal critic of IT. No doubt, he was lambasted by the left for privatization of essential services.

The criticisms to this budget have been the regulars. Very few trains for states other than the home state of the railway minister, Criticism from the left for being progressive and pro-privatisation, not spending enough on railway security etc. I agree with most of the criticism, but the budget has too many positives to focus on the negatives.

Maybe the measures taken in the rail budget will bring about a sea change in Indian railways. Maybe they won’t. What is really impressive about this budget is that a man seen to be ‘anti-development’ has learnt from his defeat. He has discarded conventional wisdom, and showed a novel approach to railway problems. He has shown how one can be progressive, and yet populist, two words rarely taken in the same breath.