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Board plays down hikes, stresses `growth strategy' -- Rlys recognised as `transport infrastructure'

Our Bureau

NEW DELHI, Feb. 25

THE deferment of dividend liability of about Rs. 1,500 crores that the Railway Ministry has secured from the Government is an indication that internal resources are insufficient to meet the investment needs of the Railways, top Railway Ministry officials said.

Railway Board officials said the Railway Budget for 2000-2001 is a ``growth budget'' wherein several strategies have been outlined for the growth of the cash-strapped Indian Railways.

The Rs. 1,500-crore dividend liability deferment is in the form of an interest-free loan from the exchequer. The modalities of its repayment will be worked out by the Railway Ministry in consultation with the Finance Ministry. This is also an indication that the Railways has finally been recognised as ``transport infrastructure'' which needs support from the Government for discharging various social service obligations.

At the customary post-budget briefing, Railway Board officials said while passenger fares have not been touched, the freight rates have been increased by a mere 5 per cent to factor in the increase in input costs of about 10 per cent.

The Chairman, Railway Board, Mr. V.K. Aggarwal, said the impact of the freight rate increase on the economy would be ``absolutely negligible''.

Explaining this, Mr. Aggarwal said the Rs. 600 crores additional resources to be mobilised were hardly 2.56 per cent of the total freight earnings target of Rs. 22,000 crores fixed for the current year.

Even though the freight rates have been increased by 5 per cent, the average hike on coal, iron and steel (A,B&C), cement, iron ore, limestone and dolomite, and petroleum products such as HSD and petrol, which represent about 60-70 per cent of the Railways' core traffic, would be only about 1-2 per cent, he said.

``So, we have increased the freight rates almost at the same level as the rate of inflation which is hovering around 2.7 per cent,'' Mr. Shanti Narain, Member, Traffic, said.

Despite this increase, the Railway Board officials discounted the possibility of diversion of traffic from rail to road, something the Ministry has been trying to stem over the past two years.

The officials mentioned that freight rates were not hiked when the Union Government increased diesel prices by 35 per cent in October 1999 despite it having put an additional burden of about Rs. 600 crores on the Railways. In comparison, th ey said, truckers had raised freight charges by 10-12 per cent. Besides, the Railway Ministry is banking on a further increase in petro prices and the possibility of a service tax on transporters to even out competition between rail and road tra nsport.

Mr. Narain said the way scripted by the budget for attaining the plan size of Rs. 11,000 crores - particularly the non-traditional means of raising funds through advertising blitz, commercial utilisation of railway land and the right of way for lay ing optic fibre cables involving private developers - suggested that it was a strategy for growth.

Outlining the unique features of the budget, Mr. Narain said the plan size has been increased dramatically and budgetary support hiked substantially, besides the deferment of dividend liability.

The officials said Indian Railways will intensify its marketing efforts to get additional traffic with special focus on traffic moving through the ports.