Thursday, March 15, 2012

Rail Budget 2012 will push growth: Vinay Mittal, Chairman, Railway Board

Railway Board chairman Vinay Mittal is pleased that his minister Dinesh Trivedi gathered enough courage to raise passenger fares and help the network raise badly needed resources. In an interview with ET's Viraj Desai after the Railway Budget for 2012-13 was presented, Mittal, the top bureaucrat of Indian Railways, shares his thoughts on various aspects of the railways. Excerpts:

What do you think are the top 4 or 5 key takeaways in terms of economics from this budget?

Railways have been bold to at least make a beginning towards recovering cost of operations. We are a commercial organisation with a lot of social responsibilities also, so we can't be viewed as just a commercial operation. Unless you have adequate funds, you cannot augment your services, line capacity or even remove bottlenecks. It is a self-defeating scenario. This is a budget which gives money to facilitate growth and take care of modernisation as well as safety-related issues.

Budget at ET: Budget 2012 | Union Budget | Railway Budget 2012 | Budget News

The recent round of hikes in freight has raised a lot of hue and cry from commodity companies. In a scenario where you are looking at revenue growth of over 27%, don't you think you would lose out from commodity companies?

The freight hike is not an ad-hoc hike. It has been a well thought out move. The fact is that even today the input costs are still not being completely neutralised. If the market is not able to absorb this, we will see what to do in due course of the year. Commodity companies would only incur a marginal expense across commodities. Why should railways keep suffering! We are suffering losses through passenger revenues. I am saying it is not a good idea to subsidise passenger fares through freight.

Does this mean that ratio of cross-subsidisation would come down?

Yes, the ratio is likely to come down. I can't tell you though at this moment how much would it come down.

What are the key things that would help railway finances?

Our fund-balance has hit rock bottom. But generation of funds through internal resources would help substantially in the current year. The incremental growth in passenger traffic and freight revenues would help our finances.

Is it a tall order to achieve an operating ratio of 84.9%, a 10% reduction in one year? Is there a precedence of the same?

It is a difficult task but definitely possible. Our operating ratio went down from 91% in 2004-05 to 84% in the subsequent year and 79% in 2006-07


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