Taking the Indian railway's turnaround story a step further Railway Minister unveiled his fourth pro-growth and pro-poor budget. The Railway Minister maintained his four years record of not raising passenger fares and for the first time in several years, Minister cut the passenger fares across the spectrum by 2% to 8%. In a bid to make it people-friendly Budget, the Minister announced cushioning of seats for unreserved second class compartments, increased number of unreserved compartments and 50% fare concession for UPSC and other official examinees.

To maintain unprecedented growth in freight transportation, Minister announced a 5% cut in freight transportation rates for diesel, petrol and a 6% reduction in all minerals, including iron ore and limestone. The lowering of freight rates is part of rationalization of the tariff structure announced by the Minister. The Minister assured that funds would not be a constraint for the development of the Railway infrastructure and there would be 800 additional coaches in passenger trains as compared to last year's figure of 700. Apart from reducing tariff, Minister also announced several facilities like cushioning of seats, new trains, extended trains, universal enquiry number, e-ticketing, selling tickets & reservations through ATMs, post offices and petrol pumps, monthly season tickets through Smart Card and so on to increase passengers' volume.

The industry sees positive impact from the budget. Measures such as freight rate cuts on petrol, diesel by 5% and iron ore by 6% would have an overall positive impact on the economy. The industry sources said that the decision for increased investments on container traffic by running more trains is a welcome step. It will bring down cost to end users and help in the long run to improve railway services. The cement and steel sector would be benefited, as transport is one of the major cost components. Freight rates kept untouched and announcement of 40% discounts on empty wagons will help the industry keeping their cost within line. Railways saw a rise in steel traffic by 5% to 7% in FY 2007.The Railway Minister also promised to support cement, steel and power companies by providing help for laying new lines upto their facilities, enhancing capacity, of existing lines making available wagons designed to suit their specific requirements, formulation of pricing policy and in developing loading and unloading terminals.

Wheat and Fertilizer companies will also gain from this reduction of freight rates. Presently, bagged consignments of wheat and fertilizers loaded in open wagons are given a discount of 20 and 30 % respectively. This discount is given in both loaded and empty flow directions. From FY 2007 onwards, in cases of incremental loading of bagged consignments in open wagons in empty flow directions an additional Empty Flow discount at the rate of 30 % will be given but after giving both these discounts, the minimum charges payable will not be lower than freight payable at Class LR-3. Thus the discount for incremental loading of cement, wheat and fertilizers in bags, in empty flow direction will increase up to about 40 percent.

Logistic industry also tends to gain as the railway focus on increasing container traffic to 100 million tonnes by 2011-12, from the present 20 million tonnes. After successful experimentation of running double stack container trains on diesel route, double stack container trains are now running between Pipavav and Jaipur. In 2007-08, efforts will be made to run triple stack container trains with low height container on diesel routes and double stack container trains on electrified routes on pilot basis.

As Railway Minister, Lalu Prasad Yadav, presented his budget 2007 stocks like BEML, Kalindi Rail, Gateway Distriparks, Kernex Micro, Texmaco, Hind Retifiers, Stone India, Alstom, Crompton Greaves were all trading strong.

Hind Rectifiers manufacturers a wide range of products used for railways, AC electric locomotives and AC electrical multiple units. The management expects to see increased requirements from the budget.

Kalindee Rail is engaged in the manufacture and installation of signaling and telecommunication equipment and execution of gauge conversion projects of the Indian Railways. The company expects some contracts to be awarded by FY08 and they believe that they will get a substantial share of the Freight Corridor project amounting Rs 30,000 cr.

Stone India, which manufactures various equipment for the railways like alternators, air brakes and brake regulators, expects another Rs 20 - 25 cr to be added due to new wagons.

BEML, manufactures hydraulic excavators, rope shovels, bulldozers, wheel dozers, wheel loaders, pipe layers, tyre handlers etc., also expects business due to new wagons.

The major BSE gainers were Tata Steel which gained 2.37 % to Rs 470.10; ITC rose 2.05 % to Rs 169.50; Satyam rose 1.56 % to Rs 455.75; Gujarat Ambuja jumped up 1.02 % to Rs 124.10 and ACC rose 0.48 % to 920 were the major movers on Sensex. The major losers were Bharti Airtel that declined 3.65 % to Rs 728.50; Wipro fell 3.58 % to Rs 600.95; Reliance Communications was down 3.55 % to Rs 417; ICICI Bank fell 2.86 % to Rs 882 and Reliance fell 2.56 % to Rs 1,376.60.

Iron ore exporter Sesa Goa surged nearly 4 % to Rs 1954, after the freight rate on transport of iron ore was cut by 6 % in the rail budget. Indian Oil Corporation lost nearly 3 % to Rs 419.85, even as freight rates on transport of petrol and diesel were cut by 5 % each, in the rail budget. NTPC fell 0.2 % to Rs 141.90 inspite of announcements that it will join Container Corporation of India and Tex Mac are to invest in 3 Decker commercial freight bookies. Container Corporation of India was down 0.2 % to Rs 1863, even as the Lalu Yadav proposed to increase container traffic five fold to 100 million tonnes by 2011/12.

Fares: The passenger fares being slashed to a tune of 2-8%. This rail budget has surely met the expectations of passengers if not exceeding them. Finally a win-win situation both for the railways and its passengers.

Class of Travel	Lean	Peak	Popular Trains
Sleeper Class	4%	4%
AC 3 tier & Chair car	8%	4%	4% (through out the year)
AC I Class	6%	3%	3%(through out the year)
AC 2 tier	4%	2%	2%(through out the year)

• Besides this minimum charge there will be an additional charge of Rs.5 per passenger for booking of every additional passenger.

• Ticket holders will be able to travel any number of times, from any station to any station on the suburban sections of Central and Western Railways of Mumbai.

• Passengers will not have to stand in a queue again and again to buy tickets.

Accessibility: In the current year 700 additional coaches were inducted in popular trains to facilitate travel of more people and increase the earnings of the Railways. In 2006-07, there has been an increase of 48% in other coaching earnings and it is likely that earnings from catering license fee will increase to Rs. 120 cr. It is for these reasons that despite reduction in fares, the losses in coaching business are likely to decrease by several hundred crores in the current year. In 2007-08 Railway Minister intends to add another 800 coaches in popular trains. Railway Minister, Laloo Prasad has formulated various schemes to address the concerns of masses and improve accessibility of Rail services.

Unreserved Ticket Distribution : At present there are nearly 2200 computerised UTS counters in the country. The number of such counters will be increased to 8000. Further, 6000 automatic ticket vending machines will be installed in major cities. These measures will be undertaken over the next two years would alleviate to a large extent the problem of long queues at ticket counters.

Introduction of train enquiry call center : By dialing the telephone number 139, passengers will be able to obtain information about arrival and departure of trains, seat availability etc. at local call rates from any part of the country. In future call centers will provide several services like Railway Ticketing, Taxi Booking, Hotel Booking etc.

Passenger Amenities at Stations : Railways had started the work of developing 5 railway stations as model stations in each division. This work will be completed at 225 such stations by March 2007. Taking this program further it is proposed to develop another 300 stations this year.

• Provision of cushioned seats in unreserved passenger coaches : From 2007-08, production of wooden seats will be stopped. In future, cushioned seats will be manufactured for unreserved second class coaches as is the case for sleeper coaches.

Modernization : In the XI five year plan, investment in IT projects will be increased to several thousand crore rupees to harness the immense possibilities offered by IT in the interest of Indian Railways. IT applications will be deployed to increase passenger and freight earnings, improve the image of the Railways in the eyes of the customer, reduce operating costs, ensure effective utilization of human and physical resources and to help the top management in arriving at long-term policy decisions by developing MIS & LRDSS.

Increase in capacity of passenger coaches : The capacity of sleeper coaches has been increased from 72 to 84, AC Chair Car from 67 to 102, AC 3 Tier from 64 to 81, AC 2 Tier from 46 to 48 and AC 1st from 18 to 22. We have, therefore, decided to start the production of these new design coaches from 2007-08.

Construction of High Speed Passenger Corridor : Indian Railways decided to conduct pre-feasibility studies for construction of high speed passenger corridors, for running high speed trains at speeds of 300 to 350 kms per hour; one each in the Northern, Western, Southern and Eastern regions of the country. These trains will cover distances of up to 600 kms in two to three hours.

Gauge Conversion : Railways are losing thousands of crores of rupees annually from remaining metre and narrow gauges. Therefore, it will convert the majority of the metre gauge lines to broad gauge during the 11th Five Year Plan. Gauge conversion will facilitate integrating the remote and far-flung areas of the country with the national main-stream. Integration with the unigauge network and consequent increase in traffic and reduction in unit cost of these lines will reduce losses being incurred on these lines.

Security in railway budget has been given a considerable weightage this fiscal too. The railway ministry has allocated Rs. 5,500 crore towards depreciation reserve fund in order to ensure replacement of the assets as soon as they become due for replacement in year 2007-08. General manager of the zonal railways are now empowered to sanction subways costing up to Rs 50 lakhs on unmanned level crossings for reducing accidents. Railway ministry has assured to provide adequate funds for necessary equipments and other resources for Railways security works, from Passenger Amenity and Machinery & plant plan heads. The ministry has also decided to increase the number of trained dogs in the existing dog squads. Doorframe and hand held metal detectors to detect explosives will be installed in many sensitive divisions and CCTV, smart video cameras will also be installed at sensitive stations. Railway Minister has also decided to fill 8,000 vacant posts in Railway protection Special force (RPF) on all India basis.

Railway network is being extended. 40 new trains including 8 Garib raths have introduced in the railway budget. Government has decided to add another 800 coaches in popular trains. Metre and narrow gauges, which constitutes 20% of railway network and contributes only 1% of the freight traffic, the railway ministry has decided to convert the majority of metre gauge lines to broad gauge during the 11 th Five Year Plan. During 2007-08, a target of completion of about 1,800 km of following gauge conversion works has been fixed. Railway ministry has also decided to conduct pre-feasibility studies for construction of high speed passenger corridors, equipped with state of the art signaling and train control systems, for running high speed trains at speeds of 300 to 350 kms per hour; one each in the Northern, Western, Southern and Eastern regions of the country. Routes of the 23 trains has been extended and frequency of 14 trains has been increased. The target for construction of new lines in 2007-08 has been fixed at 500 kilometers. RVNL is executing 46 projects at a cost of about Rs.12,000 crore to expand the capacity on high-density network of which 14 would be completed by the end of 2006-07. Construction of 544 kilometre Broad Gauge line is likely to be completed in the year 2007-08.

The railway department has shown tremendous performance in the first nine months of the current financial 2006-07which have depicted an unprecedented surplus in spite of reduction in passenger fares. Railways had registered a 17% increase in both freight earnings and gross traffic earnings. Passenger earnings have increased by 14% and other coaching earnings by 48% during the first nine months. The railways' cash-surplus before dividend is expected to reach around Rs. 20,000 crore as against Rs.14700 cr in the previous year with an operating ratio of 78.7%. Freights are growing for third consecutive years with an incremental loading of around 60 mn tones and now set new mission targets of 200 mn tonnes of cement and steel transportation by the year 2011-12.During 2005, the railways handled 480 mn tonnes (MT) of freight against the revised budgeted target of 670 MT for the fiscal year and generated revenue of Rs 25,867crores. From 473mn in FY02 to 825mn train kilometers in FY06, the number of accidents is expected to be less than 200 in 2006-07.

The target for freight loading for the year 2007-08 has been kept at 785 MT and for freight output at 516 billion tonne kms. 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 (GTE) have been projected as Rs.71,218 crore, reflecting an increase of Rs.7,248 crore on the Revised Estimates for the current year. Ordinary working expenses for 2007-08 has been kept at Rs.42,687 Crore, which is 12% more than the Revised Estimates for 2006-07. Provision for depreciation reserve fund has been pegged at Rs.5,496 crore and pension fund at Rs.8,683 crore. Thus total working expenses will be Rs.56,687 crore and net traffic receipts Rs.14,631 crore. While Railways' cash surplus before dividend is projected at Rs.21,578 crore, the targeted operating ratio is 79.6%. Indian Railways' name would thus be included in the select club of railways in the world, having an operating ratio of less than 80%. Fund balances to end of the next financial year are estimated at Rs.16,170 crore. The memorandum on rate of dividend payable to general revenues for 2007-08 has been submitted for consideration of the Railway Convention Committee. Dividend payable for 2007- 08, assessed on the basis of the rate of dividend for 2006-07, is estimated at Rs.3,909 crore. In 2007-08, the railways will not only meet this liability but will also discharge entire remaining deferred dividend liability of Rs.664 crore. In the Plan outlay for the next year, Rs.17,323 crore will be provided from internal resources.