Read Part 1: This Day 73 Years Ago, Independent India’s First Interim Railway Budget Was Presented by John Mathai
Also Part II: 73 Years Ago, First Interim Railway Budget Dealt With Employee Issues, Capacity Expansion, Board Rejig
Partition Left Indian Railways With Stretched Finances
Indian Railways’ finances were under tremendous stress when John Mathai took over post-independence.
Working expenses were estimated to go northwards due to an increase in prices of coal and food grains, pay commission proposals besides the adjudicator ruling in favour of railway staff in matters of working hours and leave conditions.
Additional expenditure
Mathai stated in parliament that working expenses would go up as follows had partition not happened:
- Pay commission proposals would have cost the exchequer Rs 31.71 crore.
- In addition, an arrangement made with the All India Railwaymen’s Federation (AIRF) included a payout with retrospective effect from January 1, 1947. This added Rs 7.93 crore as an extra three- month period had to be taken into account.
- Increase in coal prices cost IR an extra Rs 1.6 crore while the increase in food grain prices translated into an outgo of another Rs7.5 crore.
On the adjudicator’s award, Mathai felt that it was possible to keep more or less the existing staff at that to provide for the shortening in working hours relating to working hours and the increase in leave provisions as suggested without incurring additional expenses.
The additional expenditure according to Mathai translated into Rs 48.74 crore on a pre-partition basis for the financial year 1947-48. This worked out to a 36 per cent increase in the budget estimates made for working expenses.
On a post-partition basis, the numbers for 1947-48 were as follows:
A net loss of Rs 13.69 crore up to August 14, 1947, and an increase of Rs 12.38 crore from August 15, 1947, to March 31, 1948, taking the additional expenditure to Rs 26.07 crore.
Measures for additional revenue
Mathai made proposals to garner additional revenue of Rs 32.32 crore in the fiscal 1947-48- Rs 22.27 crore per annum from goods traffic and Rs 10.05 crore per annum from passenger traffic.
However, these proposals could be implemented only during the last quarter of 1947-48 (Jan-March) and the additional revenue resulting from these proposals was only one-fourth of the above at Rs 9.15 crore.
After adjusting the additional expenditure of Rs 26.07 crore, the net loss remaining was Rs 16.92 crore.
IR reserves stood at Rs 21.61 crore. This meant a net surplus of Rs 4.69 crore after adjusting the net loss of Rs 16.92 crore. However, IR’s betterment fund and depreciation funds were intact providing Mathai with a reason to cheer.
Mathai said IR would make a net surplus of Rs 4 crore if the status quo continued for another year.
His estimate was based on two counts- one, increase in economies and two, a reduction in ticketless travel.
The Railway Enquiry Committee set up to make proposals of economies in IR was suspended for a few months due to partition. Mathai was confident that once they re-assembled after normalcy returned, IR would benefit immensely from the committee’s proposals.
On ticketless travel, the whole Parliament including Mathai had several insights to offer. It was a burning issue in those days especially in the lower classes of travel.
Increase in passenger fares
Mathai increased passenger fares as follows:
For first-class tickets, fares were raised from 24 paise per mile to 30 paise per mile for up to 300 miles (first slab). For distances thereafter, the fare was 18 paise per mile plus a 13 per cent surcharge,
Second class fares increased from 12 to 15 paise per mile for the first slab and thereafter at nine paise per mile plus 13 per cent surcharge.
Inter class fares were fixed at nine paise per mile for mail trains and 7.5 paise per mile for ordinary trains up from the then average rate of 5.47 paise per mile plus a surcharge.
For the lowest class of travel, the third class, fares were fixed at five paise for mail trains and four paise for ordinary up from the then average rate of 3.6 paise per mile.
Mathai explained that differential fares were being charged for mail and ordinary trains so as to not impose an additional burden on the lowest class passengers.
Interestingly five railway companies- Bombay Baroda& Central India Railway, Great Indian Peninsula Railway, East Indian Railway, South Indian Railway and the Madras & Southern Mahratta Railway were already charging four paise or more per mile.
With these proposals, Mathai expected first-class revenue to increase 80 per cent, second class and inter-class by 40 per cent each and third class by 33 per cent over pre-independence fares.
Season ticket rates in urban areas were also increased by 50 per cent for first-class, 25 per cent for the second class, 18.75 per cent for inter-class and 12.5 per cent for third class respectively. In rural areas season tickets were priced at 12 return fares a month
Re-adjustment in freight rates
Knowing the state of transition the country was going through, John Mathai did not propose any general increase in freight rates.
However, he made certain internal re-adjustments in freight rate classification as follows:
- Schedule rates which were below standard rates under classification rules were abolished.
- Certain commodities which were non-essential were upgraded from lower to higher classes.
- Telescopic rates were introduced for certain classes of goods with no increase for distances over 600 miles. Station to station rates were reviewed and the minimum rate was increased from 0.175 per maund per mile to 0.25 per maund per mile.
- These increases were made by ensuring no increase in the rates for food grains and a marginal increase in cotton piece goods.
- Coal haulage rates were increased by four annas ( 25 paise) per ton. In addition, concession rates for steel were also increased by the Bengal Nagpur Railway.
Mathai also proposed the setting up of a Railway Rates Tribunal, an independent judicial body in April 1948 for an unbiased examination of freight rates.
The minister knew that the decision to increase fares and freight would be unpopular. He concluded his statement by observing that any increase was the only way to avoid a deficit given the circumstances prevailing in those days.
End of Part III
There was no talk of pollution at the time of Independence. Now this is the main issue.
Railways expanded and planned and did not allow the pollution to dominate much whereas perhaps other sectors polluted in the name of development.
At that time also people used to go on piligramage to Kasi and Rameswaram and other places by walk or bullak carts with lot of devotion, but now people are going on fast track and able to see these places travelling on Railways with more comforts and ease.
What will happen to the future, may be difficult to predict?