by Wu Qiang
NEW DELHI, Feb. 26 (Xinhua) -- In its first full railway budget for the 2015-2016 fiscal, the Indian government under Prime Minister Narendra Modi promised not to raise any ticket fares while increasing somewhat the freight prices.
Also, there would be no new trains to be added to the networks in the coming fiscal year, while no privatization is envisaged in near future, according to the budget announced by Railway Minister Suresh Prabhu at the Lok Sabha or Lower House of Parliament.
While stressing on the need to make railways financially sustainable and also on modernization of infrastructure, the budget failed to impress any body at home and abroad.
Analysts say the railway budget is highly populist rather than reformist, because the railway is a national symbol of what remains of India's semi-socialist and state-owned economy in which the government puts huge subsidies to keep the mechanism running, although not very efficiently.
The budget was also a reflection of the newest policy orientations of the Modi government and was keenly watched for few reasons.
It came soon after the Bharatiya Janata Party (BJP) was badly beaten in the local election of the Indian capital last month, which resulted in the election of a populist, anti-graft party, the Aam Aadmi Party (AAP), which vowed to deliver substantial social support to the voters like cheap electricity, free water and better public services.
Secondly, the Indian railway is facing severe shortage of fund to keep itself running properly, not to mention modernizing and expanding.
The budget estimate for the railways' total revenue during 2014- 2015 was 1,640 billion rupees (26.4 billion U.S. dollars).
Of this, earnings from passengers made up about 27 percent, while those from freight 73 percent. The total expenditure was estimated at 1,490 billion rupees (24 billion U.S. dollars).
With 2.4 billion U.S. dollars of annual profits, the Indian railway has too little resources to pay for its projects for innovation, modernizing and expanding. In the last budget, it was said at least 8 billion U.S. dollars will be needed each year over the next 10 years just to complete the ongoing projects.
Railways are fast losing freight carriage market share to road transport and currently only account for 30 percent of the freight traffic in the country compared to 90 percent in 1950s, said local media.
Observers say since diesel prices have been on a slide, there was a general expectation that the freight rates would be reduced.
But the budget hiked freight fares rather than passenger fares, to the surprise of many.
The reason is classic: Railways ministers rely on freight charges, key input cost for industry, for cross-subsidizing passenger fares that are kept low to ensure affordability for low- income traffic of the people.
The government had hiked passenger fares by 14.2 percent and freight rates by 6.5 percent in June 2014, just three weeks ahead of the last half-yearly railway budget.
Prabhu was expected to announce at least some initiatives in the railways under the PM's Make in India national project, but only 1,200 km of new rail lines will be built this fiscal year.
