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Customer takes first class seat in Prabhu’s plans

Railway Minister Suresh Prabhu effected no hike in passenger fares, indicated a cut in freight tariffs, admitted that the global economic slowdown is hurting India’s core sectors and pointed out that the looming impact of the Seventh Pay Commission made it one of the toughest times to formulate a Budget.

Yet, Mr. Prabhu, in his second Rail Budget presented on Thursday, unveiled a bouquet of new train services, innumerable new initiatives to make life easier for passengers and proposed an ambitious capital outlay of Rs. 1.21 lakh crore for 2016-17, a jump of 21 per cent over this year.

While the Railway Minister didn’t refer to a sharp 50 crore shortfall in his passenger traffic estimates for 2015-16 — the Railways is expected to carry just 810 crore passengers down from 860 crore that he had projected in the last budget — he sought to win back passengers by offering some airplane-type features like on-board entertainment and travel insurance options at the time of booking.

The Minister also signalled a fresh approach to woo industry from alternative modes of transport that have chipped away a large share of its freight traffic over the years, by moving away from the typical focus on increasing revenues through tariff hikes.

“We want to challenge our conventional thinking on freight policies to win back our share in the transportation sector,” Mr. Prabhu said. “We will exploit new sources of revenue so that every asset, tangible or non-tangible, gets optimally monetised,” he said, referring to potential revenues that could accrue from advertising and monetisation of the Railways’ vast land holdings.

Chairman of the Railway Board A.K. Mittal later said the Railways is looking at bringing down its freight rates for the first time in the coming year, in a bid to increase revenues through higher volumes.

While Mr. Prabhu reiterated the government’s commitment to rev up the economy through public investments, he is betting on a string of belt-tightening measures, other income and optimism to fulfil that commitment with gross budgetary support of Rs. 45,000 crore for the public utility in 2016-17.

Pointing to austerity measures yielding savings of Rs. 8,720 crore this year, the Minister promised to increase cost optimisation in diesel, electricity and other expenses. “…With an optimistic outlook for the economy… we hope to generate revenues of the order of Rs. 1,84,820 crore next year, 10.1 per cent higher than the revised target for 2015-16,” Mr. Prabhu said.

Tapping new revenue streams and optimising expenses are part of a new structure Mr. Prabhu announced to revitalise the Railways.

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