Railways to slash operational cost; curb working expenses

The Budget will have multiple initiatives for improving passengers facilities

Reeling under the impact of gross budgetray support cut and falling revenue collection, Railways is firming up plans to to slash operational cost and working expenses considerably to meet its financial requirement.

Expecting very little help from the exchequer to meet the additional expenditure due to implementation of Seventh Pay Commission recommendations, railways is in the process of undertaking a series of measures to raise the resources on its own as told by the Finance Ministry.

Railway Minister Suresh Prabhu, gearing up to present his second Rail Budget on February 25, will unveil a plan to cut expenses and at the same time increase non-tariff revenue substantially to wade through the difficult phase in the public behemoth.

The aim is to reduce working expense by about 15 per cent.

"The total working expenses was Rs 1.62 lakh crore (Rs 1.62 trillion) last year," sources added.

Rationalisation of staff strength and optimisation of workforce beside trimming of allowances are some of the steps to be undertaken to reduce working expenses.

The Budget will also have multiple initiatives for improving passengers facilities, a key area in rail function, to make it more people-friendly, according to sources.

As per the plan, the next fiscal is expected to witness sustained efforts to reduce the energy bill by 20 per cent which is touching Rs 30,000 crore (Rs 300 billion) at present.

While the electricity bill is about Rs 12,000 crore (Rs 120 billion), diesel cost is about Rs 18,000 crore (Rs 180 billion) a year.

Prabhu is focusing on generation of a substantial revenue through non-tariff sources like such as advertising, parcel-leasing, export of railway equipment and commercial exploitation of railway land.

The redevelopment of 400 stations is a step towards commercial exploitation of rail premises in a big way.

Railways will provide space at trains, stations, bridges and other available places for advertisement.

An action plan on aggressive advertising is likely to unfold shortly, they said.

Railway Budget would also focus on raising investments in infrastructure development.

The railways freight traffic stayed at 7 per cent below the target set for the April-December period in the current fiscal year. Passenger bookings were also 5 per cent lower than projected for the current fiscal.

Finance Ministry has slashed the gross budgetary support of railways to Rs 32,000 crore (Rs 320 billion) from the Rs 40,000 crore (Rs 400 billion) announced in the last rail budget.

The Seventh Pay Commission recommendations will also put an additional burden of Rs 32,000 crore (Rs 320 billion) on the railways.

Though Prabhu had requested the help of Finance ministry to tide over the situation, but it was turned down.

The Finance Ministry instead asked the railways to raise resources on its own.

The image is used for representational purpose only. Photograph: Reuters