NEW DELHI l WEDNESDAY l FEBRUARY 27 l 2013 VOL XXXVIII NO 311 24PAGES I Rs 4.00 READ TO LEAD IF FARES REMAIN AT A LEVEL FAR BELOW THE COST OF SHORTAGE OF FUNDS CANNOT BE A REASON FOR OPERATIONS, IT IS HARD TO PROVIDE SAFE, CLEAN SUB-STANDARD SERVICES & EFFORTS MUST BE AND COMFORTABLE JOURNEYS TO TRAVELLERS MADE TO PROVIDE REASONABLE FACILITIES P A W A N K U M A R B A N S A L , R A I L W A Y M I N I S T E R P U B L I S H E D F R O M : A H M E DA B A D, B A N G A LO R E , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D, KO C H I , KO L K ATA , LU C K N OW, M U M B A I , P U N E FinancialExpress.com twitter.com/FinancialXpress facebook.com/TheFinancialExpress FinancialExpress/Apps UPA EXPRESS SLOWS AT POLL SIGNAL SENSEX SLIDES 316.55 PTS ON FREIGHT HIKE SENSEX Intra-day, Feb 26 19400 19300 Prev close: 19,331.69 19,290.66 High: 19,293.49 Low : 18,976.94 19200 19100 19000 19,015.14 18900 Open Close S TOCKS plunged to their lowest in nearly three months as the railway budget turned a non-event, while traders remained anxious ahead of the February 28 Union Budget. The Sensex and Nifty both declined 1.6% to their lowest since November 29, following a sharp sell-off across the board. The Sensex fell 316.55 points to 19,015.14 on fears that the freight rate hike could push up prices. The Nifty too slid 93.4 points to 5,761.35. ■ DETAILED REPORT ON PAGE 11 ■ SHARES OF RAILWAY GOODS & MODEST REVENUE TARGETS; FREIGHT TO RISE WITH FUEL COST fe Bureau New Delhi, Feb 26 TRACKING AUSTERITY ■ Basic passenger fares left untouched but I N the railway budget 2013-14 presented in Parliament on Tuesday the , Congress’ Pawan Kumar Bansal resisted the temptation for another grand vision for the financially stressed and operationally crippled national transporter ahead of anelectionyear,butbatted responsibly by setting economical revenue targets and realisablecapitalinvestment goals. Clearly focused on the short term — this would likely be UPA-II’s last rail budget before the 2014 elections — Bansal has sought to reduce the cross-subsidisation of passenger fares by freight even as he refrained from hiking passenger fares, revised as recently as last month. This is obvious from a projected 30% increase in passenger earnings from a mere 5.2% increase in the number of passengers. More than a third of railways’ gross traffic earnings comes from the goods segment right now, thanks to inadequatepass-thoughof costs over several years to passengers,especiallythosewhotravelinthelower-classcoaches. INSIDE reservation charges and tatkal fee raised ■ Across-the-board increase in charges levied on freight by an average of 5.8% ■ Reservation fee for AC 1st & executive classes up at R60 from R35, for 1st class & AC-2 doubled to R50 ■ Reservation fee for AC chair car, AC-3 economy and AC 3-tier increased to R40 from R25 ■ Supplementary charges for travel on superfast trains raised by between R5 and R25 ■ Tatkal charges for sleeper class raised by R15 to R25 and for AC chair car from R25 to R50 ■ Charges for ticket cancellation across all classes increased by between R5 and R50 ■ Next-gen e-ticketing system to be upgraded to handle 7,200 tickets per minute against 2,000 now Illustration: SHYAM MARKET ANGUISH See Edit: Slow train to nowhere, Page 8 For the record, Bansal announced automatic revision in freight to factor in fuel costs every six months, starting with an average 5.8% rise in freight of major commodities from April 1. This could rake in R4,200 crore, more thanoffsettingtheriseinfuel Overcapacity worries wagon makers cost — R3,300 crore annually — due to the recent deregulation of bulk diesel prices. Fuelsaccountfor26%of therailway’s operational expenses and Bansal said that the electricity and diesel price revi- sions in 2012-13 would inflate the transporter’s fuel bill for 2013-14byR51,00crore.AnotherR881croreisexpectedfrom raising passenger reservation and related charges. Freightrevenueisestimat- PAGE 2 Rlys piggybacks on govt, eyes pvt help ed to increase just 9% in 201314 as against this year’s 24%, whilethegrosstrafficreceipts (GTR) are set to rise 14%. So, overandabovetherecenthike in passenger fares, more differential pricing and segmentation could be expected in this segment. (One profit cen- trecouldbethenewAnubhuti coachesinselecttrains.) To his credit, Bansal, the firstCongressministertopresent a rail budget in 17 years, showedtheresolveandtenacity to disentangle the pricing of the national transporter’s services and distribution of itsinvestmentsfrompolitical considerations and favouritism.Thenewprojectsand93 new trains he announced were spread out evenly while , Arunachal Pradesh is set to be connected to the country’s vast rail network. A proposal forsettingupaRailTariff Authority ,hesaid,wasbeingformulated and discussed amongministries. The freight revenue target basedonameagre4%projectedriseinloading,seemsmodest, especially since Bansal endorsed the policy of automatic fuel surcharge. Also, the GDP growth next year is not likely to be slower than thisyear’sestimated5%.GTR for 2013-14 are estimated to be R1,43,742 crore, up 14% over the current year in which the GTR increase is seen at 21%. Ordinary working expenses for 2013-14 is estimated to grow at the same rate as the GTR,toR96,500crore. ■ Continued on Page 2 PAGE 4 Alleffortstoreinincosts,saysBansal PAGE 5 ALL IN A DAY DA “I have never seen such an anti-people budget in my political life... This is a budget for the Congress... You can give new trains for Rae Bareli, but don’t ignore Bundelkhand and Poorvanchal,” SP chief Mulayam Singh Yadav said. ■ “The rail budget disappoints. Fare has been hiked through the back door,” BSP supremo Mayawati said. ■ ■ “This is not a rail budget but a Rae Bareli budget,” said BJP’s Gopinath Munde. “There is no new scheme for the NDA-ruled states. The budget has nothing for Gujarat, Maharashtra, Chhattisgarh and Bihar.” ■ Bihar chief minister Nitish Kumar said the budget was “disappointing” and alleged that while Congress-ruled states were given sops, other states have been neglected. ■ Budget reformist and forward-looking, says PM ■ Implementable and practical, says FM SERVICES COS PLUNGE, PAGE 11 TCS to pay $30 m to settle dispute with 2 ex-staffers TATA Consultancy Services (TCS) has agreed to settle a suit filed by two former employees alleging violation of certain rights of its nonAmerican workers in the United States. The company has agreed to pay a sum of $29.8 million for settling the matter. In 2006, two former employees accused it of forcing all non-US workers to sign over their US tax refund cheques back to the company and also that TCS deducted Indian salaries from their compensation. ■ Details on Page 6 RESULT CORNER Ranbaxy posts Q4 loss on generic Lipitor recall RANBAXY Laboratories posted a R492.44-crore loss for the fourth quarter ended December 31, from a profit of R754.17 crore in the September quarter. A voluntary recall of generic Lipitor, the world’s top selling drug, shaved R186 crore from the top line even as Ranbaxy made mark-tomarket losses of R261.9 crore on long-term derivative contracts and foreign currency loans owing to a weaker rupee. ■ Details on Page 6 Flights are still costlier, Electricity tariff hikes on cards as but things may change freight charges add to cost of coal fe Bureau New Delhi, Feb 26 R AILWAY minister Pawan Kumar Bansal has left basic passengerfaresunchanged while marginally increasing reservation and other fees. However, travel by higher classes might turn expensive in the coming months thanks to increased segmentation and wider price differential likely between classes. Bansal, who had hiked passenger fares across the boardlastmonthtonetR6,600 crore annually, on Tuesday said he does not want to pass on the impact of deregulation of diesel price and hike in electricity charges to passengersforthetimebeing. Though passengers would be shelling out more for train travel as the minister has marginally increased the supplementary charge for superfast trains, reservation fee, clerkage charge,cancellationcharge Plan to waste Sunil Jain in R Rajdhani - AC 1st class fare New Delhi - Mumbai 3,920 New Delhi - Kolkata 4,000 New Delhi - Chennai 5,375 New Delhi - Bangalore 5,500 New Delhi - Trivandrum 6,410 Rajdhani -AC 2-tier fare 2,325 2,370 3,175 3,240 3,760 Cheapest air fare 3,201 4,607 4,662 4,714 5,833 *Fares indicative for booking date May 31 to June 2 *Rail fares include R150 increase on AC-1 and R100 on AC-2 due to reservation fee, Tatkal charges and Superfast charge increase announced by railway minister Pawan Kumar Bansal in the budget and tatkal charge, average railfareswillcontinuetobe cheaperthanflightcharges. However,ifyouchooseto travel first class AC on most Rajdhani trains, the fare will be nearly R800-1,000 higher than the cheapest air fares available to the same destination. At the same time, the differencebetweenACtwo-tier fares and air fares remains high despite the recent discounts offered by various airlines on domestic routes. On the lucrative New Delhi-Mumbai route, oneway fares for AC first class after the increased charges was R3,920 while air fares on the same route was around R3,201. But AC twotier fares are more affordable at R2,325. The travel industry was pleased that there was no increase in railway passenger fares. ■ Continued on Page 2 F ACED with high diesel prices, the railways has decided to pass on the increase in fuel costs to freight tariffs, which could push up transport costs of various commodities including coal by 5-6%. Railway minister Pawan Kumar Bansal proposed a fuel adjustment component (FAC) for cargo freight while presenting the budget for 2013-14. With the provision of revision every six months, the FAC will be dynamic in nature and change in either direction.Itwillbeapplicable in the coming fiscal. With the FAC, the railways will be able to absorb R4,200 crore of the additional burden due to the revision in dieselprices.Therailways’fuel costs for the current fiscal are likely to inflate by more than R5,000 crore, thanks to a recent decision by the Union OMCs to fork out more, so may we T HE hike in the freight rate by the railways for transporting diesel and other oil products will increase the under-recovery of the oil marketing companies (OMCs) and may result in a subsequent rise in retail prices. The railway budget 2013-14 increased the freight rate for diesel by 5.79% to R1,041.80 per tonne from R984.80 per tonne. The railway minister also increased freight on other fuel products such as kerosene to R937.60 per tonne from R886.30 per tonne and LPG to R937.60 a tonne. ■ Page 2 Cabinet to deregulate diesel price for bulk consumers. The budget has also projecteda4%increaseinfreight traffic that could further increase freight revenue. “Thisbeingasensitiveyear (generalelectionsareduenext year), there was no choice for the minister as revenues cannot be increased from land monetisation or public-private partnership route in the short term,” said Ernst & Young’sAbhayAgarwal. The move will increase input costs for power and steel and impact grain prices. “It will push up the landed cost of fuel for power plants and necessitate electricity tariff hikes, “ said Ashok Khurana, director general, Association of Power Producers (APP). However, it may not have much impact on grain prices, reckon industry players. Alok Sinha, a former chairman, Food Corporation of India, said: “The increase in freight is likely to have a marginal impact on the transport cost of foodgrains.” Railways carries a major chunk of grains to be distributed to poor families under the targeted public distribution system. Therailwayshasprojected freight revenue of R93,554 crore, which is 8.8% higher than the budget estimate of the current year. The railways had estimated freight revenue of R85,956 crore in the 2012-13 budget. But as per revised estimates, it could face a shortfall of 4%, R3,383 crore in the targeted revenue. Bulk diesel sales are roughly 20% of the total market for the fuel. While the recent R10/litre hike in diesel prices has added to the railways’ fuel costs, power tariff hikes have also impacted it. EXPERTSPEAK: Congratulations for a pragmatic budget: AV Poulose, P4 ■ Doesn’t depict any promising future: RN Misra, P5 ■ THOUGH BJP HAS YET TO TAKE A VIEW ON THE BILL, SINHA’S STATEMENT WILL PUT IT IN A QUANDARY Food security Bill will burden fisc, a bad idea: Sinha fe Bureau New Delhi, Feb 26 F EDIT P8 fe Bureau New Delhi, Feb 26 AIRFARE vs RAILWAY FARE ORMER finance minister and BJP leader Yashwant Sinha said on Tuesday the Food Security Bill (FSB) would burden the fisc. Sinha, who is chairman of the Standing Committee on Finance, said the scheme, which envisages subsidising grains for the poor, would push up demand for food stocks to a level where the government would be forced to import grains to maintain supplies. Given that the general Apart from the big burden on the fisc, the low prices will raise demand for grain — as a result, we may even end up importing grain to maintain supplies MUCH TO CHEW ON In the news YASHWANT SINHA, Finance standing committee chairman elections are expected to be held in 2014, Sinha’s views may end up putting the BJP in a quandary Sinha had re. cently criticised the government for failing to release 70 million tonnes of grain into themarketandhadobserved that the food subsidy would aggravate inflation. The UPA government has beenkeentopushthroughthe FOOD SECURITY BILL: SALIENT FEATURES ■ The Bill mandates 7 kg of grain per person per month for below the poverty line (BPL) families and 3 kg for general households at subsidised rates ■ Priority rice for poor households at R3/kg, wheat at R2/kg & coarse grain at R1/kg ■ General households to get rice, wheat and coarse grain at 50% of MSP ■ The entitlements to cover 75% of rural population and 50% of urban India ■ Major reforms proposed in PDS, setting up of food commissions at Centre and states ■ Govt estimates annual cost to exchequer for food security at R1.2 lakh crore ■ However, CACP chief says scheme will cost R2 lakh crore every year for three years FSB,whichwouldensuresubsidised grains to 75% of the population — with the poor getting a higher subsidy — aheadof thegeneralelections. However, it is not entirely clear yet whether the scheme will be rolled out in a phased mannerin25-50districtstobegin with or launched on a bigger scale. The government is expectedtomakeonly a token provision in FY14 with the bulk of the subsidy being providedforinFY15. According to CACP chairman Ashok Gulati, the scheme could cost around R2 lakh crore or 2% of GDP each yearforthefirstthreeyearsof the rollout. The food stocks will be distributed through the existing PDS though the quantum that would need to behandledismorethantwice thecurrentvolumes. The finance minister has said the fiscal deficit for the current year would be reined in at 5.3% of GDP Between . April and December 2012, the deficit was R4,04,700 crore or 79% of the Budget estimate. During this period, the total expenditure was R9,91,100 crore, up 10.6% y-o-y and at 67%of theBudgetestimate.
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