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February 26, 2001                                       Feedback  

    - EXIM POLICY '00



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Text of Railway Minister Mamata Banerjee's speech

Budget Speech - Part I

Mr. Speaker, Sir,

I rise to present the Budget Estimates for the year 2001-2002 for the Indian Railways. At the outset, I would like to sincerely thank our Hon'ble Prime Minister Shri Atal Bihari Vajpayeeji for his valued guidance in discharge of my ministerial responsibilities. I could count on his advice and encouraging direction whenever I approached him with any issue relating to Indian Railways. It is my proud privilege to present the second Railway Budget of the millennium and I would like to sincerely thank you, Mr. Speaker, Sir, and through you, all the Hon'ble Members of this August House for enabling me to do this.

Sir, last sixteen months have been a period of intense experiences for me. During this period, I have seen Indian Railways from close quarters. I have seen millions of Railway family members, working round the clock, to run more than 13500 trains across 7000 stations every day, cutting across almost all the States. I have seen Railways spontaneously rushing into the interiors of Orissa, Bengal and Gujarat with a helping hand when unfortunate natural calamities struck them. I have also seen Railways ferrying water and fodder to the drought hit states to save precious lives. Posterity will not forget the sight of hundreds of trains trailing into Allahabad, day after day, carrying millions of countrymen on the occasion of Mahakumbh. Sir, when our jawans and tanks are moving to the border areas and when foodgrains from Punjab and Haryana are going on our trains into the interiors of far flung states, I feel proud to be associated with Indian Railways as one of its family members. A railway compartment in our country represents, perhaps, the best example of a secular, united India, bringing about emotional, regional, cultural, linguistic and economic integration of our diverse society. With these experiences, Sir, I have developed a firm belief that just as water and air are crucial for existence of a human life, Railways are equally essential, for the life of the nation. This organisation, being the largest Railway system in the world under a single management, has enormous strength and potential.

Sir, amongst the transport systems world-wide, Rail mode is re-establishing itself. This resurgence is because Railways are six times greater energy efficient, and four times higher land use efficient mode of transport. Railways are, perhaps, the most environment friendly transport system, the world has ever known. With its huge network spanning over 63,000 route kilometers, Indian Railways are, in fact, engine of growth for the national economy. It is difficult to perceive growth of Indian economy without a corresponding growth in Railway infrastructure.

But, Sir, sadly, Indian Railways with all its inherent strengths and potentials has not received the attention it deserves from the nation. With the increase in population, expectations of the countrymen from this system, and the social responsibilities reposed on it, are continuously on the rise. On the contrary, the investments in this system have been almost continuously declining over the years. The capital support from the General Exchequer which reached a peak of 75% in the Fifth Five Year Plan, fell to 42% in the Seventh Five Year Plan and skidded to a low level of 18% in the last two years of the Eighth Plan. To fill-in the gaps, Railways have been forced to resort to larger market borrowings with attendant huge burden of interest liability. This has inflicted long term damage to the otherwise healthy Railway finances. As a consequence, railways share in freight movement has also dropped from 89% in 1950-51 to about 40% as of now.

Sir, Indian Railways are at cross roads today. We are facing the dilemma of realising our true identity, our objectives and goals. On the one hand, we have the social responsibility of being an affordable carrier of people and goods. On the other hand, we are often expected to play the role of a profitable commercial enterprise and, thus, fend for ourselves. I learn from many economists and experts that the answer lies in treating ourselves as 'cost centres' and 'profit centres'. Sir, the countrymen know that Railways have grown as a 'people-centric', 'society-centric' public utility. Sir, let us pause here for a moment and do some soul-searching. Are we a commercial enterprise only? Or are we a public utility? Or should we continue to play a combined role in the larger interest of the public good? Sir, Indian Railways are not merely a transportation utility. They are a dependable friend of the Indian people. And just as a friend in need is a friend indeed, the Railways have stood by our people in good as well as bad times.

Sir, Railway experts and economists have been criticising Railways for starting large number of projects with low or negative rate of return. Sir, I am neither an expert nor an economist. But as one of the common man in this country, I feel that Railways existence is necessary to pave the way for development. Emphasising only high economic rate of return, will discourage any developmental initiative in far flung areas. Can we afford to do it, Sir ? I expect that my Hon'ble colleagues will guide me in searching for an answer to this question.

Sir, there are large number of challenges which Railways face today. The dual roles of Railways as public utility and a commercial undertaking are at times conflicting while the sources for funding these two diverse activities are the same. Railways also do not receive compensation for social service obligations. Technological modernisation of Railways is critically required, but low investment over the last two decades has almost stopped this process. Unfortunately, the support from General Exchequer also has been taking a downward trend right from fifth Plan till Eighth Plan, dropping from 75% to 18%. This is pushing railways on to borrowings at high rate of interest causing permanent damage to its finances. Internal resources of railways have also suffered a severe and permanent jolt immediately after implementation of Fifth Pay Commission recommendations. Railways have 16 lakh employees which is 40% of the entire central government strength. In the coming year, pension alone is likely to cost Rs. 5,800 cr which Railways have to bear themselves. Otherwise, Pension liabilities of other Government employees are borne by General Exchequer.

Sir, during my tenure, I have initiated several measures to meet these challenges within our limited means. For the first time, Railways seriously started pursuing the non-traditional sources of revenue generation. However, developing new sources, which are non-traditional, and tapping them takes time. I had also launched a serious economy and austerity drive. Sir, the House is aware that this drive had yielded a saving of Rs. 850 cr during previous year. For the current year also, the target in this regard is Rs. 865 cr. However, Sir, these measures are not adequate to meet the severest challenges. Some more steps are needed which I would like to outline below:-

For financing socially relevant projects and for running train operations to meet socially desirable ends, outright grants without dividend liability should be provided by the State. On the other hand, a special fund with a mix of seed contribution, borrowings and private sector participation should be created for funding remunerative and operationally required projects.

Railways need to develop market oriented and customer friendly outlook due to emerging competition within the transport sector.

Sir, the House is aware that much discussed recommendations of Railway Safety Review Committee chaired by Justice Khanna have evoked large support from Hon'ble Members. But Railways are still awaiting the recommended one time grant for safety purposes.

There is urgent need to prioritize railway projects for speedy implementation. Cost-sharing of such prioritized projects with the State Governments, which has recently begun, should be further intensified. Sir, I would like to thank the State Governments of Andhra Pradesh, Tamil Nadu, Maharashtra and Karnataka who have already come forward in this direction. I wish other State Governments will also join these efforts.

Railways have an enormous hidden wealth in the form of land, airspace etc. which needs to be unlocked to augment its resource base. Several non-traditional means of mobilising resources have been introduced recently. But this process needs to be taken forward in all seriousness.

Sir, these steps, I feel, will bring about major improvements in the Railway finances. I am happy to inform the House that this aspect is now being professionally looked into by an Advisory Committee under the Chairmanship of Shri Sam Pitroda.

Brief review of financial performance during 1999-2000

Sir, Hon'ble Members are aware that the year 1999-2000 was an extremely difficult year, as the Railways had to face the impact of recession on earnings coupled with soaring increase in the working expenses as a result of implementation of the Fifth Central Pay Commission. But, Sir, we have together fought this adverse situation with all the courage at our disposal.

I am happy to inform the House that due to concerted hard work of railway family members, we achieved an all-time record of incremental freight loading of 35 million tonnes, surpassing the target of 450 million tonnes by 6.42 million tonnes in the year 1999-2000. This was, indeed, a remarkable achievement despite the background of severe setback in the year before that. Even the passenger earnings registered an impressive growth of 12%, and surpassed the budgeted target by Rs. 132 cr.

As a post budgetary development, Railways finances came under stress due to upward revision of price of diesel oil as well as levy of an additional cess and revision of tariff by some of the State Electricity Boards. This coupled with damage caused to Railway property by Orissa cyclones put an additional burden of around Rs 900 cr on the system. Sir, we consciously chose not to shift this burden on to rail users. I am happy that we were able to absorb the entire burden ourselves.

Despite all these difficulties, gross earnings increased from Rs 33,021 cr in Revised Estimates to Rs. 33,125 cr in the actuals. Total Working Expenses which stood at Rs 30,909 cr in the Revised Estimates were also contained at Rs 30,844 cr. Pensionary liabilities, budgeted at Rs. 4,094 cr in the Revised Estimates finally came down to Rs. 4,022 cr. The plan expenditure stood at Rs. 9,057 cr as against Rs. 8,965 cr in the Revised Estimates. The market borrowings however, were reduced from Rs 3,000 cr in the Revised Estimates to Rs 2,919 cr.

Review of financial performance during the current year

Sir, the House will recall that a target of 475 million tonnes was fixed for loading of revenue earning freight traffic for the year 2000-01. Indian Railways have already loaded about 390 million tonnes of revenue earning freight traffic during the period from April, 2000 to January, 2001 which is 18.48 million tonnes more than the loading achieved in the corresponding period of last year. Keeping the trend in view, the freight-loading target of 475 million tonnes would definitely be achieved. In the current year, positive growth has been witnessed in loading of coal, iron ore for export, POL, iron and steel, cement and 'other goods'.

I am happy to inform the House that there has been a historically high growth in passenger earnings, which reached about Rs 8,552 cr by end of January 2001. This marks an increase of Rs 740 cr over previous year's earnings during the corresponding period. Other Coaching and Sundry earnings also have been quite encouraging compared to previous year's performance.

Non-traditional sources of earnings

Sir, the House would recall that the Railways had, for the first time, set for themselves the task of mobilising the resources from non-traditional sources such as leasing of 'right of way' for laying Optic Fibre Cables, commercial utilisation of land and air space and commercial publicity on rolling stock and station buildings. A target of Rs 750 cr was kept for 2000-01.

I am happy to inform the House that RailTel Corporation of India has already started functioning to build a nation-wide broad band and multimedia network by laying Optical Fibre Cable along 62,800 route kms of railway track by utilising Railways' 'right of way'. The business plan of this Corporation as developed by professional consultants is now awaiting final approval of the Government. The Corporation will soon start its core activities after the business plan is finally approved by the Government. In the circumstances, although we had projected an income of Rs 500 cr from this Corporation in the current year, it is now expected that significant revenue flows will commence only during 2001-02. In view of the positive response and encouraging offers already received by RailTel Corporation both from within the country and outside, Railways propose to initiate other such ventures. For example, a separate IT company is contemplated to avail of the opportunities offered by e-commerce.

Commercial utilisation of Railway land / airspace has been identified as one of the valuable non-tariff options for raising additional resources. In my last budget speech, I had set a target of Rs. 150 cr to be realised through railway land. I am happy to inform the House that 53 sites identified for this purpose are being developed through RITES and IRCON, which have been appointed as nodal agencies for executing these schemes. A sum of Rs. 81 cr has already been realised by end of December 2000 on this account. We hope to achieve our target by the end of the financial year.

A sum exceeding Rs. 30 cr has been generated by way of commercial publicity and advertisements on stations and rolling stocks. This innovative measure was introduced for the first time by way of a non-traditional means of raising resources. Although the target of Rs. 100 cr for the year may not be achieved, the breakthrough made in the very first year has inspired us to exploit this resource more and more with the help of professionals. In the next year, empowered groups both at national and zonal levels will enhance these activities taking professional help. A comprehensive and transparent policy package would be drawn up within a period of three months.


Sir, I fully share the concern of the House and the public about critical need for improvements on safety front.

The House is already aware that Justice Khanna Committee had concluded that for rehabilitation of railway assets for safety, there was a need for a grant of Rs. 15,000 cr to be made available to Railways over a period of 5 to 7 years. As resources of this magnitude cannot be expected to be internally generated by the Railways, I was very much hopeful that a way would be found to meet this recommendation of the Committee. This has, however, not materialised. Sir, on this issue, I am sorry, my speech would be silver but my silence would be golden.

Sir, I would like to assure the House that within our limited means, Railways are committed to accord highest priority to safety. Despite the financial constraints being faced by the Indian Railways, we are trying to ensure that the level of outlay on safety related works is maintained. Track renewal works must receive priority. I, therefore, propose to enhance the outlay for this crucial activity taking it to Rs 2,050 cr, marking an increase of almost 26% over the revised outlay for the current year. Induction of modern technology into our signalling and telecommunication system is equally important. This has the added benefit of progressively reducing dependence on human intervention, thus leading, to an improved safety environment. That is why, Sir, I have decided to enhance the outlay on signalling and telecom in the next financial year by as much as 25% over the revised outlay in the current financial year. Sir, with these enhanced outlays, I am happy to inform the House that we are, indeed, making provision of amount exceeding Rs. 3,000 cr on safety heads. However, this allocation will only help us meet the current arisings and not the arrears for which additional funds would be required.

Sir, in order to ensure that safety requirements are strictly followed at all levels, I have already made the Chairman, Railway Board in charge of safety on Indian railways. This would facilitate better co-ordination on all safety related activities at the highest official level.


The Railway Budget 2001-2002
The Budget 2001-2002 Special
The Y2K Railway Budget

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