March 2nd, 2008 
krishna If you are a banker, the railways could be your next big-bang customer. With a surplus of Rs 25,000 crore and a vastly-improved balance sheet, railway minister Lalu Prasad can thump Chak De and raise tonnes of debt without any credit rating. Deferred dividend liability of nearly Rs 2,823 crore – arrears pertaining to 2001-02 when the railways was going through a tough time – are being paid up this year and there is no need to make any provision from 2008-09 onwards. That relieves the railways of Rs 660-crore burden per annum, providing more leeway for investments in infrastructure, safety and passenger amenities.
The investible surplus estimated for 08-09 is pegged at Rs 19,992 crore, leaving the railways as an underleveraged entity. The estimate is no exaggeration as revised estimates indicate the investible surplus for the current year at Rs 20,049 crore. The slew of commitments made by the railway minister for investments in infrastructure over the medium term is founded on this bulging abundance.
The UPA government can take credit for the railway turnaround story at next year’s general elections without hesitation though it may not cut much ice, unlike the job bonanza announced for porters and the promotions expected by those working as gangmen.
Without hiking fares or freight, Lalu Prasad has managed a cumulative cash surplus (before dividend) of Rs 68,778 crore over a period of four years. Thanks to the booming economy, revenue from freight as well as passenger traffic has increased steadily, enabling the railway minister to go for cut in fares as well as freight.
With operating revenue improving to 76% and return on capital hitting an all time high of 21 %, the railway minister can go all out with populist measures, if we wishes so, before the 2009 elections. The situation is so good that a provision of Rs 500 crore has been made in the pension fund to implement recommendations of the Sixth Pay Commission even though it is not sure if this will add to the burden of the railways in08-09.
Notwithstanding the blips affecting economic growth target of 9% during the current year, freight as well as passenger earning targets have been met during the first three quarters. The freight loading target for 07 -08 has been increased to 790 million tonnes, resulting in an increase in earnings of Rs 800 crore. Pan of the boom could be a result of increase in input costs for road transporters who feel the impact of fuel prices much more than railways, say industry watchers.
The projected gross traffic revenue for 08-09 would be Rs 81, 90 1 crore which indicates an increase of Rs 12.6% over the revised estimates for 07 -08. Freight earnings have been projected at Rs 52,700 crore with an estimated volume of 850 million tonnes. In the backdrop of decline in exports on labour-intensive goods due to rupee’s appreciation during 2007 and sluggish growth in some sectors, the Railway Board seems to have settled for a moderate growth in freight volume and a healthy growth in revenue since the handful of new sops announced by Lalu would not have much of an impact on the top line.
Posted in 
