Speech of the Railway Member introducing the Railway Budget for 1927-28. INTRODUCTORY. I rise to present the Railway Budget for 1927-28 and I confess that I do so with a certain sense of embarrassment. For after having made one farewell speech on the Railway Budget, it is awkward to have to make another. I can only plead that my predicament is not one of my own seeking, and for that reason I feel that I can claim the sympathy of the House. 2. As usual, the Budget which I am presenting is not merely a departmental compilation. In preparing it we have had the assistance of the Standing Finance Committee for Railways; we were handicapped this year by the fact that the Standing Finance Committee for Railways naturally went out of existence when the last Assembly was dissolved, and that this House was not able to elect a new one until January 25th last. Thus, we were not able to spread the examination of the figures over a period of several weeks as was the case last year. But when the Committee was constituted, Mr. Parsons lost no time in placing the Budget before it, and I understand that at considerable sacrifice of personal convenience and by dint of much hard work, for which we owe them grateful thanks, the Committee was able to make a very thorough examination of the Budget. In the Budget ›apers which will shortly be circulated, Honourable Members will find some changes which I hope they will appreciate. In the first place, we have prepared the statement of railway revenue and expenditure in foolscap instead of octavo form. We have made this change because in the Budget debates of last year there was some complaint that the figures could not be studied without an undue strain on the eyes. Secondly, a feature of the Budget papers this year is the provision of maps and diagrams. We have appended to the explanatory memorandum a Railway map of India which will enable the Honourable Members to see at a glance what new lines we propose to construct, and what new lines we propose to survey. Then in the pink books will be found a sketch map of each Railway system showing exactly how we are developing and how we hope to develop the system. In addition, each book contains a diagram which gives full information as to the gauge of each extension, its length and cost and the progress we hope to make in each of the next 5 years. Our object of course is to enable Honourable Members readily to grasp what our programme is for the extension and development of the Indian Railway system and to see whether we have made provision for particular new lines in which they may be interested. I am also circulating with the budget papers a Memorandum explaining fully what we anticipate would be the effect on our railway finances of a reduction from 1s. 6d. to 1s. 4d. in the rupee ratio not only in the budget year but also by the time the full effect of the change would be felt. As this Assembly is a new Assembly some Honourable Members may not be aware of the practice we have established in the last two years. It is the custom now for Honourable Members, when they give notice of motions for reductions, to add a few words to indicate the nature of the subject they wish to bring up for discussion. This procedure is of great assistanceto the House generally and to Government Members in particular, and I should be very grateful if it could be repeated this year. 3. Full explanations of the figures in the Budget are given in the Budget Memorandum, in the explanations attached to each of the Demands for Grants and in the pink books for individual railways. Following my usual custom, therefore, I propose to confine myself to a brief review of the more important figures, and to some account of the more important activities of the Railway Board and the Railway Administrations. Financial Results of 1925-26. 4. I need not spend time over the actuals of 1925-26. It was a good year for Railways though not as good as 1924-25. In my Budget speech last year, I told the House that we expected to have a net surplus (that is, the gain from commercial lines minus the loss on strategic lines) of 877 lakhs, and that we expected that we should transfer 532 lakhs to General Revenues and 345 lakhs to Railway Reserves. Actually we did a little better than we anticipated. I will not go into the figures in detail, for they are given in the Administration Report for 1925-26. But in the result we transferred 549 lakhs to General Revenues and our Reserves benefited to the extent of 379 lakhs. The return on Budget lines in 1925-26 was 5.31 per cent., and if this figure is not quite so good as in the exceptionally prosperous year of 1924-25, when, the return was as high as 5.85 per cent., it is better than any of the other post-war years and better than it was in 191314. Revised Estimate for 1926-27. 5. I am sorry to say that I cannot give as favourable an account of the probable financial results of the current year. We budgetted on commercial lines for gross receipts amounting to 102 58 crores and gross expenditure, including interest charges, of 92:13 crores. That is, we counted on a gain from commercial lines of 10:45 crores, and deducting an anticipated loss on strategic lines of 174 lakhs, on a net surplus of Rs. 871 lakhs. On the basis of these figures, we expected not merely to be able to pay our net contribution of 601 lakhs to General Revenues but also to transfer 270lakhs to our own Reserves. But we now know that our budget figures are not likely to be realised. We now estimate that our gross receipts will be 98.31 crores or 4 crores less than our budget estimate, and that our total charges will be 90.56 crores, or 157 lakhs less than our estimate and that the gain from commercial lines will be 775 lakhs instead of 10:45 crores. The loss on strategic lines is now put at 181 lakhs instead of 174 lakhs, and the final result is that we now expect a net surplus of 594 lakhs instead of 871 lakhs. The net contribution payable under the Convention to General Revenues is, as I have said, 601 lakhs. We expect, therefore, to have to draw on our Reserves to the extent of 7 lakhs to enable us to pay our dues to General Revenues. As Clause 4 of the Convention shows, that is the primary purpose for which these Reserves exist. 6. These figures are disappointing, but I confess that I take a philosophical view of them. It seems at first sight a serious matter that we should have to cut 4 crores off our budget estimate of gross receipts. but railway earnings depend so largely on factors outside railway, or rather I should say human control, that we can never be sure that our budget estimates of gross receipts will not be falsified by the course of the season and the state of trade. And this is what has happened in the current year. Up to the end of July, in spite of reductions in passenger fares and coal freights, we were ahead of the earnings of last year. The monsoon seemed promising, and we had hopes of a really good year. The prospects took a turn for the worse, and now we expect our earnings from goods traffic to be worse than our estimate by 2 crores and our earnings from passenger traffic to be worse by nearly 1 crores. Two Railways, the Eastern Bengal and Assam Bengal Railways, have done better than we expected. The explanation is that they serve areas which have been favoured by an exceptionally abundant jute crop and a good tea crop. For the rest, the failure of gross earnings to come to our expectations is common to all Railways. As usual, we have suffered much from floods. They affected the Bengal-Nagpur Railway, the Great Indian Peninsula Railway and the Bombay, Baroda and Central India Railway, but they were particularly disastrous in Burma. The main iine of the Burma Railways was so badly breached that communications could not be restored for several weeks with the result that earnings on this Railway are half a crore below our estimate. Again, the season proved unfavourable for the cotton crop. The final estimate for the year is nearly a million bales below last year's figure, and in addition the crop was abnormally late. Our earnings from raw cotton were less by 60 lakhs in the first 8 months of this year than in the corresponding period of last year. Cotton is now moving freely to Bombay, but the effect of the bad start is clearly seen. in the figures of the two Bombay Railways, while the earnings of the North Western Railway have been similarly affected by a comparative failure of the crop in the Punjab. Between 1st September and the 29th January 1927, only 36,000 tons of cotton were exported from Karachi, compared with 61,000 tons last year. I have thought it worth while to take this one instance of cotton by way of illustration, but the drop in our gross earnings, especially in goods traffic reflects just the fact that trade has not been as good as we expected. Slackness of trade too has no doubt affected passenger earnings, but it is possible that we were a bit too optimistic in our estimate of the effect of the reductions of fares brought into force last year. We expected the immediate effect to be detrimental to our earnings, and for that reason pitched our estimate of gross receipts 2 crores lower than otherwise we would have done. But now we have to reduce our estimate by a further 137 lakhs. It is not that there has been no increase of passenger traffic, but it has fallen short of our estimate and in spite of the increase in traffic we expect to earn 37 lakhs less from passengers this year than we did in 1925-26. It is too early to assess the effect of the reductions we gave last year in long distance coal freights. Owing to the coal strike in England, the circumstances of the year have been quite abnormal in the matter of coal. At any rate, we have carried more coal, and I do not think that we have lost money by the reduction. 7. The drop in earnings is partially counterbalanced by considerable reductions in our working expenses. On commercial lines our revised estimate of working expenses is 1 crores below the budget estimate. Of this amount, nearly 1 crores is in the cost of operation. Our coal bill in particular should be about crore less than our estimate, partly of course because of the decrease in traffic and the lower cost at which we can now buy, but also as the result of vigorous measures taken by the Railway Board to secure great economy. The statistics given in Volume II of the Administration Report for 1925-26 show how consumption has decreased relatively to the work done and bear testimony to the effectiveness of the measures taken by the Railway Board. 8. I have said that I take a philosophic view of the disparity between our revised and budget estimate. I go further. I think that the results. of the current year illustrate the strength of the position Railways are now in. We have had a comparatively poor year marked by exceptional floods, partial crop failure amounting to scarcity in parts of the country and slackness of trade evidenced by the fact that up to the end of December last our total foreign trade was nearly 50 crores less than in 1925-26 and 60 crores less than in 1924-25. Nevertheless, we hope to earn this year a net return of 477 per cent. on the capital at charge enabling us to pay our interest charges and to pay all but 7 lakhs of our contribution to General Revenues. It has also to be remembered that the contribution payable this year is based on an exceptional prosperous year and amounts (leaving strategic railways out of account) to the big sum of 760 lakhs. In my view, having regard to the inevitable fluctuations in Railway receipts from one year to another, these results go far to justify the wisdom of the policy to which we are working. Budget Estimate for 1927-28. 9. For the year 1927-28, we have adopted a more cautious estimate than last year. We are budgetting for gross receipts from commercial lines amounting to 100-40 crores and for a total total expenditure of 91-47 crores. If our expectations are realised, the gain from commercial lines will amount to 8.93 crores and the net gain, after deducting the loss on strategic lines, will be 7.10 crores. Out of this sum, we shall have to pay 548 lakhs to General Revenues, that being the net contribution payable on the results of 1925-26, and we hope to strengthen our reserves. by 162 lakhs. 10. I do not propose to comment on these estimates at length. The main feature of them is that we put our gross traffic receipts on commercial lines at 99.24 crores or 2 crores more than the revised estimate of the current year, and that we expect to earn these receipts at a working cost of only 8 lakhs or so in excess of the working expenses of this year. On the whole I should describe these estimates as framed in a spirit of sober optimism,-in the hope that we shall on the whole be free from the misfortunes which have beset us this year, and that trade and traffic will pursue a more even course; and also in the hope that our continued efforts will result in further economies in our charges. For example, the House will notice that though we should ordinarily have to expect an increase of about 15 lakhs in the cost of administration on account of increments to salaries, we are actually budgetting for a reduction of 10 lakhs in the cost. This is because we hope that Agents will be able, by improvements in their administrative machinery, to cut down the existing scale of their expenditure by, perhaps, a quarter of a crore. We cannot of course be certain that we shall be able to get this reduction in full next year, part of which must be occupied in investigating the existing methods and procedure and seeing how they can be improved. But at least we shall do our best to do so. We have also been able |