Indian Railways Wheeling on fast track

INDIAN Railways today is quite upbeat on closing the fiscal 2006-07 with a massive cash surplus of Rs 20,000 crore (before Dividend). And achieved that without imposing undue burden on the common man. In fact, he has bettered on fiscal 2005-06 that ended with a cash surplus of Rs 14,700 crore. No established financial management theory can explain how it happens. Railways minister Lalu Prasad has his own economics and management theory.
“I have a tremendous sense of pride and gratitude. Pride in the fact that the Railways are poised to create history by generating a cash surplus before Dividend of Rs 20,000 cr as against Rs 14,700 cr in the previous year. This is the same Railway that defaulted on payment of Dividend and whose fund balances dipped to Rs 359 cr in 2001,” he said in his 2007-08 Budget speech and attributed this huge success to his 1.4 million railway family members “who in the face of stiff competition have conquered all odds with an indomitable spirit displaying matchless zeal, vigour and teamwork.”
“By rendering an unprecedented surplus in spite of the reduction in passenger fares, we have disproved the myth that Railways were sinking in to a financial crisis due to social obligations. Our turnaround strategy based on a perfect blend of commercial wisdom and empathy for the people has made the Railways a centre of attraction for the world,” he said.
In the first nine months of the current fiscal year terminating on March 31, 2007 Railways have registered a record-breaking growth. The Passenger earnings have increased by 14 percent and other coaching earnings by 48 percent during April to December 2006. A historic increase of 17 percent was registered in both freight earnings and gross traffic earnings during this nine-month period. Based on the growth registered so far, the revised estimates for Passenger, Other coaching, Freight and Gross Traffic Earnings have been kept at Rs.17,400 crore, Rs 1,726 crore, Rs42,299 and Rs. 63,120 crore, respectively. Gross Traffic Earnings are likely to go up by 16 per cent in comparison with last year and exceed Budget Estimates by 5.5 per cent.”
Cash surplus before Dividend is expected to be Rs.20,063 crore Net Revenue is expected to stand at Rs 14,870 cr. The surplus, after payment of Dividend of Rs.3,579 crore and deferred Dividend of Rs.663 crore, is expected to be Rs. 10,627 crore. Indian Railways is poised to achieve an operating ratio of 78.7 percent during the current fiscal. This is “perhaps the first occasion in the glorious history of 150 years of Indian Railways when our fund balances would reach Rs. 16,000 crores and the Net Revenue to Capital ratio, an historic level, of 20 per cent. Indian Railways’ name would thus be included in the select club of Railways in the world, having an operating ratio of less than 80 per cent”, the Railways minister pointed out in his Budget speech.
The upbeat mood of the Railways is reflected in their targets set for the next financial year (2007-08). The target set for freight loading is 785 million tonne (MT) and freight output 516 billion tonne. Maintaining the double digit growth rate, the Budget Estimates for Freight, Passenger and other Coaching Earnings have been kept at Rs.46,943 crore, Rs 20,075 crore and Rs 2,200 crore, respectively. Gross Traffic Earnings have been projected as Rs 71,218 crore, reflecting an increase of Rs.7,248 crore on the Revised Estimates for the current year.