India to invest billions in rail revamp

Lalu Prasad, India’s railways minister, announced a new round of cuts in passenger fares on Tuesday in a budget designed to solidify support for the government ahead of general elections. “Everybody is appreciating that I have done tremendous work,” Mr Prasad said in English before embarking on a 115-minute speech in Hindi. Unveiling what was likely to be his last full budget before the general elections, due to held by next spring, he said the railways had “received acclaim the world over as a unique mega-enterprise”. The minister announced investment of nearly Rs2,500bn ($63bn, €42bn, £32bn) over the next five years to modernise and expand the country’s 63,000km railway network, a critical link in India’s creaky infrastructure. Of this, Rs1,000bn would be raised from the private sector, he said, with concessions to be awarded next year for the development of “world class” stations in New Delhi, Mumbai, Patna and Secunderabad. Promising a new focus on cleanliness and safety, Mr Prasad also announced plans for “discharge-free green toilets” in 36,000 coaches and pledged to fill nearly 7,000 vacancies in the railway police force. “The railways have to make heavy investments for the expansion of the network, modernisation and upgrad[ing] of technology and for providing world-class facilities to the customers,” Mr Prasad said in his budget speech. Lalu, as the earthy railways minister is invariably known, leads an important regional party from the state of Bihar, the Rashtriya Janata Dal, and is a key player in the ruling United Progressive Alliance coalition government. He is seeking to make a comeback in his home state where he was ousted from power in 2005 amid a general sense that his 15-year rule had seen Bihar become a byword for corruption and economic despair. Since taking over the railways, a government department with 1.4m employees, Mr Prasad, one of India’s best known low-caste leaders, has cultivated a new persona as a homespun management guru. But businesses complain that they are faced with uncompetitive rail transport costs because of the way India’s relatively high freight charges are used to cross-subsidise ever lower fares for the 14m passengers who use the network every day. Mr Prasad’s fifth railway budget reduced ticket prices for categories of high-end carriages most exposed to new competition from low-cost airlines. Copyright The Financial Times Limited 2008 By Jo Johnson in New Delhi Published: February 27 2008 03:08 | Last updated: February 27 2008 03:08