Railway Budget (2009-10)

Union Railway Minister Mamata Banerjee presented the new Union Proggresive Alliance (UPA) Government’s first rail budget of for the ‘aam aadmi’ (common man) without tinkering with passenger fares or freight tariffs and instead focusing on passenger amenities. Like her predecessor, Lalu Prasad Yadav, she has presented a populist railway budget with no hike in fares or freight rates, but without Lalu's stress on efficient fiscal management and profitability. She begins with a slight fall in the railways income, which she attributes to exaggerated projections in the last budget.
In her second ‘avatar’ as Railway Minister she brought forward from her National Democratic Allaince (NDA) stint the concept of Public-Private Partnership (PPP) projects, saying the budget will focus on “inclusive growth” and expansion of the rail network to “take development to every corner of the country”.

Slew of Measures
Announcing a slew of measures including launch of 12 nonstop long-distance trains as well as airconditioned double-decker coaches for intercity travel, Mamata also spelt out concessions for the unorganised sector under the 'Izzat' (dignity) scheme.
Lalu had earlier announced a two per cent cut in passenger fares in the interim budget, she proposed a monthly season ticket of Rs 25 for people with an income of up to Rs 1,500 per month for travel up to 100 km. Other proposals included introduction of 57 new train services, extension of 27 trains and increase in frequency of 13 trains.
The Minister also announced special sops for students in Kolkata, for whom concessional monthly season tickets will be also applicable for travel in the city’s metro. The concessions will also be extended to students of madrasahs (Muslim educational institutions). The budget says the Railways will set up a 1,000 MW power plant. It plans to take over ailing wagon-making units like Burn Standards, run under the Heavy Industry Ministry, just to save 1,000 jobs in West Bengal. Her home state also gets a new coach factory. Seven nursing colleges will be set up on railway land in Delhi, Kolkata, Mumbai and other cities.
The Minister proposed an outlay of Rs 40,745 crore for 2009-10. Of this amount Rs 2,921 crore will be spent on new tracks, Rs 1,750 crore on gauge conversion and Rs 1,102 crore on passenger amenities, which is 119 percent over and above the funds allocated in the interim budget. Rs 424 crore will also be spent on amenities for railway staff--79 percent more than the interim budget.
Mamata also announced a new coach factory would be set up at the Kanchrapara-Halisahar railway complex in West Bengal with an annual capacity of 500 Electrical Multiple Units (EMUs), MEMUs and metro coaches in the joint venture private partnership mode.

Suburban EMU Trains
She also proposed introduction of ‘only ladies’ suburban EMU trains in Delhi, Chennai and Kolkata during office rush hours as well as airconditioned ‘yuva’ trains which, with lower fares, will serve young people and low-income groups. These will run from the major cities to the rural suburbs with fares ranging from Rs 299 up to 1,500 km to Rs 399 up to 2,500 km. Weekly services on a pilot basis will be introduced within three months between Delhi-Mumbai and Delhi-Kolkata.
Timely track renewal, modernisation of signalling equipment and use of digital ultrasonic flaw detectors will be introduced for the safety of train passengers, besides an integrated security system that will be installed at 140 ‘vulnerable’ train stations. All-women Railway Protection Force (RPF) squads for female passengers will also be introduced.
The minister announced a dozen new point-to-point nonstop ‘Turonto’ (quick) trains and also proposed introduction of airconditioned double decker coaches for intercity travel.
FiftY ‘train stations will be developed as ‘world class’ stations with another 375 to come up as ‘adarsh’ stations with improved basic amenities. Multi-functional complexes with shopping facilities, food stalls and budget hotels are to be constructed at 50 stations that serve as gateways for tourist and pilgrimage centers or serve industrial clusters.
An ‘expert’ panel to suggest innovative financing and implementation of the new projects is being set up, she stated. The budget also announced the formation of a committee under Sam Pitroda, currently chairman of the National Knowledge Commission, to commercialise Indian Railways’ optic fibre network.
The budget stated that the priority would be given to bring about a perceptible improvement in cleanliness, quality of catering, safety and security and punctuality of all trains. To improve the cleanliness the Onboard Housekeeping Scheme (OBHS) will cover 200 additional trains. Doctors and infotainment services will be available on long distance trains.
The budget also proposed 1,000 new locations for passenger ticket reservation as well as expansion of unreserved ticketing system terminals from 5,000 to 8,000. Besides, automated ticket vending machines will be installed at 200 large and medium sized train stations. Computerised ticket reservation at post offices and mobile ticketing service vans were also being considered.
On extension of facilities for the physically disabled, there will be more ramps, elevators, escalators and special coaches for physically challenged and aged passengers.
In freight and parcel business, the premium services for container movement with assured transit times was being considered.
The Indian Railways would acquire 18,000 new wagons this fiscal against 11,000 in 2008-09. Private ownership of special purpose rolling stock for commodities and private operation of freight terminals will also be encouraged. Premium parcel services with guaranteed transit times will be introduced on a pilot basis on three routes initially. Reiterating her priority to extend railway services to farmers, Mamata announced introduction of special trains to ferry perishable farm products like fruits and vegetables as also village handicrafts and cottage industry and textile products from production clusters to consumers.

Highlights of Railway Budget
* 57 new trains, a dozen of them non-stop.
* Poor to get Rs 25 monthly tickets for 100 km travel.
* Rs 1,102 crore for better passenger amenities.
* One doctor on each long distance train.
* Tatkal booking time to be cut from five to two days.
* Yuva trains @ Rs 299 up to 1,500 km.
* 50 ‘world-class’ stations to be set up.
* Double-decker trains on select intercity routes.
* 60 per cent concession on tickets to all students.
* Concession for scribes raised to 50 per cent.
* SMS updates for waitlisted passengers.

Economic Survey (2008-09)

The pre-budget Economic Survey for 2008-09 presented in the Parliament India’s economic growth may accelerate to about seven per cent this year provided there is a normal monsoon and the government undertakes sweeping reforms like abolition of fuel subsidies and expansion of infrastructure.
Growth Rate and Inflation
The speed at which the country’s economy would return to a high growth trajectory in the short term also depends on a revival of the global economy, particularly the US economy, the survey stated. India should be back on the path of 8.5 percent to 9 percent growth per annum provided policy and institutional bottlenecks are removed, it added.
The survey, prepared by the finance ministry, also said inflation was no longer a worry and called for an urgent return to the targeted fiscal deficit of three percent. The deficit grew to 6.2 percent in 2008-09 as the Government unleashed stimulus spending to insulate the economy against the global meltdown. The survey also called for offloading equity in public sector undertakings, reform of fertilizer and food subsidies and auction of third-generation cellular phone spectrum.
The survey said the government should take advantage of the recent low price in oil costs to deregulate petrol and diesel prices. It also urged it improve the investment climate including hiking the foreign investment cap in insurance to 49 percent from 26 percent. Foreign Direct Investment (FDI) in multibrand retail should be allowed, starting with food retailing, and price controls on sugar and fertilizers should be removed, the survey noted.
Manufacturing: The survey said the size of the Indian market and the unmet demand for industrial products provides reasonable hope that demand would not be a constraining factor. There is also a reasonable consensus that given the market situation, industry is unlikely to face a price deflation, it said.
It said manufacturing posted 2.4 percent growth in the last fiscal against 8.5 percent in the year-ago period. The pace of slowdown accelerated in the second half of 2008-09 with the sudden worsening of the global financial markets and a bleak economic outlook. With jobs getting lost by the thousands as a fallout of the downturn, the survey asked the government to review labour laws for pushing growth in employee-intensive sectors.
Exports: The Government should slash customs duties, streamline export promotion schemes and pay special attention to infrastructure to overcome the contracting exports on account of the ongoing recession faced by India’s major trading partners, the survey stated.
The survey stated that besides short-term relief measures and stimulus packages, some fundamental policy changes are also needed for the merchandise trade sector.
The survey called for “weeding out unnecessary customs duty exemptions” and rationalising the tax structure, including specific duties, in a calibrated manner, taking into account the specific duty levels prevailing in the trading partner countries.
Fiscal Deficit: The government should also assess the possibility of entirely eliminating fiscal deficit, but with flexibility that it could be widened at a time of economic slowdown, the survey suggested. It urged the government to review the possibility of zero fiscal deficit as part of Fiscal Responsibility and Budget Management (FRBM) II.
Tax Reductions: Noting the country’s tax system continues to be complex, the survey asked the government to undertake further reforms including implementation of a uniform tax structure. It said the introduction of a Goods and Services Tax (GST) would be opportune for deepening the reforms process already underway. GST is scheduled to be implemented from April 1, 2010.
Public Sector Undertakings: Some of the suggestions in this year’s Survey are extremely sensible, such as subsidising kerosene only for non-LPG and non-electricity rural homes, ending leakage of subsidies, introducing a new income-tax code or phasing out a plethora of transaction taxes, surcharges and cesses.
The advice to rein in the burgeoning deficit and put the government back on the path of fiscal responsibility is laudable. To do this, the Survey suggests the government can get Rs 25,000 crores annually through disinvestments: offloading 10 per cent from unlisted PSUs after getting them listed, and auctioning off loss-making PSUs. It has also advised the Government to decontrol oil, fertiliser and drug prices in order to further stimulate the economy.
The biggest items of reform are the disinvestment proposals in the Survey. It suggests selling 5-10 per cent equity in identified profit-making non-Navratna PSUs, listing of all unlisted PSUs and selling of a minimum of 10 per cent equity to the public, auctioning of all loss-making PSUs that cannot be revived, and negative bidding in PSUs with zero net worth in the form of debt write-offs.
Assessment
The survey is critical of the way the oil price hike was handled, but it supports the politically sensitive issue of freeing the petrol and diesel prices from government control. It means consumers will pay global rates of oil and government subsidy will cease. The housewife will get only six to eight cylinders of subsidised cooking gas in a year and for the rest she will pay the market price. The sudden hike in the petrol and diesel prices on Wednesday has already shocked consumers and more such shocks are possible in future should the oil prices shoot up again.
Timely implementation of the projects is, therefore, essential to maintain their financial viability. Then there are policy and regulatory gaps, inadequate availability of long-term finance and inadequate capacity of the private sector. As part of the solution, the survey has called for establishing a regulatory authority for the transport sector covering the highways, railways, ports and airports.
The recommendations may not be fully reflected in the budget. Yet, its survey of the macroeconomy and its analysis indicate the direction in which government policy would be moving.
Highlights of Economic Survey
* Unleash reforms - phase out cesses, surcharges and transaction taxes (such as commodities transaction tax, securities transaction tax and Fringe Benefit Tax)
* Introduce new Income Tax Code that results in neutral corporate tax regime
* 7-7.5 percent growth possible in 2009-10
* Allow 49 percent FDI in defence and insurance; permit FDI in multi-format retail starting with food
* Proposes another round of fiscal stimulus including tax cuts and increase in expenditure
* Decontrol petrol and diesel prices; end Government monopoly in railways,
* coal and nuclear energy
* Lift all bans on future contracts to restore price discovery; decontrol sugar and fertiliser
* Revitalise disinvestment programme to generate Rs 25,000 crore annually, list all PSUs and auction those beyond revival
* Economic growth decelerated in 2008-09 to 6.7 per cent from nine per cent in 2007-08
* Fiscal deficit in 2008-09 shot up to over 6 per cent from 2.7 per cent in 2007-08
* Survey indicates FRBM-II to get back to path of fiscal consolidation
* Complete the process of selling 5-10 per cent equity in identified profit-making non-’Navratna’ PSUs
* List all unlisted PSUs and sell a minimum 10 per cent equity to public.
* Auction all loss-making PSUs that cannot be revived
* In PSUs with zero networth, allow negative bidding in the form of debt write-off
* Auction 3G spectrum
* The auctioned spectrum must be freely tradable, with capital gains on spectrum to be taxed under the Income Tax Act
* Rationalise Dividend Distribution Tax to ensure full single taxation of returns to capital in the hands of the receiver
* Reform petroleum (LPG, Kerosene), fertiliser and food subsidies to reduce leakages and ensure targeting
* Limit LPG subsidy to a maximum of 6-8 cylinders per annum per household
* Phase out kerosene supply-subsidy by ensuring that every rural household has a solar cooker and solar lantern
* Review customs duty exemptions and move to a uniform duty structure to eliminate inverted duties
* Implement GST from April 1, 2010
* Rapid operationalisation of UID Authority within 3 months
* Agriculture growth fell sharply to 1.6 per cent in 2008-09 from 4.9 per cent
* Exports grew at 3.4 per cent to 168 billion dollar in 2008-09 from 163 billion dollar in previous fiscal
* Imports grew at 14.3 per cent to $287.75 bn from $251.65 bn
* Trade balance deteriorated to $119.05 bn from $88.52 bn.

Withdrawal of US Troops From Iraq

The US troops are making preparations to leave Iraq. The other news is that the US State of Illinois has agreed to the resolution of withdrawing the US troops from Afghanistan, in which it is also said that reducing its military strength in Afghanistan is not in the interest of the US. Although this resolution will have no effect on the policies of the US President Barack Obama, it still gives an inkling of the thinking of the US citizens because Illinois is a state assembly and this resolution's effect may not be apparent just now, but will reveal itself later.

Apparent US Interest
After withdrawal of the US troops from the main cities of Iraq, it has become apparent that the interest of the US has shifted from Iraq to the Taliban. The interest in the Taliban now made it apparent that the US is now fixated on Pakistan. The Pakistan Army and Administration, since a long time, much against the wishes of its people, has been under US influence, or rather under its orders. To keep the US happy, the Pakistan Army has been killing its own citizens. As the governor of Baluchistan, Nawab Zulfiqar Magsi, has put it, Pakistan has become a plaything of the Western powers, and the US can be blamed for the troubled times that Pakistan is going through, which has made Pakistan a battlefield. The chaotic conditions in Iraq, Pakistan, and Afghanistan can be attributed to the US and its allies.

The intentions of the US seem dangerous from the Iranian viewpoint also. Verbal duels between President Obama and Iranian President Mahmud Ahmadinezhad are in full swing, and there seems little hope of the situation improving; in fact, it seems to be getting worse. The departure of the US troops, if only partially, seems to be good news for the Iraqis. The news is that the US troops will leave the Iraqi cities by 30 June. The conditions in Iraq, instead of improving, seem to be getting worse. It is said that the US camps are not far from cities and as soon as the situation deteriorates, they can rush back in. One hundred and thirty three thousand troops will move from cities to camps. The US has already announced that its military activities in Iraq will cease by September 2010, and it will withdraw completely from Iraq by 2011.

Chaotic Conditions
The only reason that the US troops will stay in Iraq until 2011 is so that its puppet regime is well-settled. The situation in Iraq is still not fully in control of the United States. Chaotic conditions continue to exist, and more than 250 persons have been killed. To hide its incompetence, the Iraqi Government is blaming Al-Qaida. It will not be wrong to say that the Iraqi regime is using the explosions currently taking place there for deterioration in communal relations, so that various factions continue fighting with each other and the tension between Shia and Sunni can continue, leaving the puppet regime alone, rather than unite and fight with the regime. This is why the departure of the US troops is good news, but it is all part of the plan to protect the interests of the US. It is difficult to even imagine what the Iraqi people are going through since the departure of the Saddam Hussein regime. The US claims it has liberated Iraq, but the truth is that it has destroyed the country and made a living hell over there. The destruction of Iraq is just the first step in a long-drawn out plan. The US is also claiming to be withdrawing from Iraq as the atrocities it has committed there are now coming out openly, and it does not want to be blamed for any further loss of life and property.

Reputation and Prestige
At the same time, the US has put its reputation and prestige at stake because of the Taliban and Al-Qaida. The US made trumped up charges and scared the whole world of their apparent danger. However, its true aim remains the Taliban because the US does not want the two Muslim powers to team up, and it calls courage and achievements of Al-Qaida as extremism, and its actions as terrorism. This is why President Obama wants to remove the US troops from Iraq and increase the presence of the US in Afghanistan and wipe out the Taliban and Islamic extremists in Pakistan, and hit two targets with one arrow. That is the reason why the US continues to help Israel and strengthen it. It does not seem that many drastic changes will take place during Obama's regime, different from the regime of former US President George W. Bush.