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Last Updated: Tuesday, 6 July, 2004, 09:44 GMT 10:44 UK
India unveils new railway budget
Indian train station
More than 13 million people use the network every day
India's new government has unveiled a populist railway budget with no changes in passenger and freight charges.

It is the first financial plan announced by the Communist-backed Congress government and comes ahead of the main budget due on Thursday.

Congress and its allies swept to power unexpectedly in May after pledging to spread India's wealth more equally.

Investors are concerned that their efforts could slow down India's economic reforms programme.

Unveiling his budget, Railway Minister Laloo Prasad Yadav said fares would remain the same and announced subsidies on travel, as well as increased spending on rail infrastructure.

Among the highlights are:

  • 141.98bn rupees ($3.10bn) to be spent on improving infrastructure and safety on the 150-year-old network
  • modernising the system's ageing signalling system, including setting up a computerised traffic control system
  • Fifteen new express train services.

Mr Yadav said the railways would have to borrow 34bn rupees from the market to meet a part of its expenses.

Fiscal deficit

The BBC's Anu Anand in Delhi say if the main budget follows the same trend, India is likely to see its deficit balloon further.

Railway Minister Laloo Prasad Yadav
Mr Yadav has not raised passenger fares
India's economy - Asia's third-largest - has been growing at a phenomenal rate, second only to China.

But combined state and federal spending has led to a deficit of almost 10% of GDP, among the highest in the world.

Analysts say that as the new government tries to fulfil its campaign pledge to spend more on health and education, it will also have to worry about keeping growth on track.

India's railway network is among the world's largest, carrying more than 13 million passengers a day.

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