to place our contracts for coal at cheaper rates in the current year, and to this and further economies in consumption, look forward to a reduction of 38 lakhs in our coal bill.

Capital Expenditure.

The

11. The House will remember that the approved programme for capital expenditure in the current year authorised a total capital erpenditure of 34.58 crores. This was the estimate given by railway administrations of the amount which they hoped to spend during the current year on approved works. I explained last year our principles with regard to fixing the capital budget. We do not wish to restrict the execution of sanctioned works nor to hamper in any way the Agents' efforts to carry to completion such works as rapidly as possible, and we accordingly authorised them to spend up to the full amount they thought they could spend during the year. We knew, however, from past experience that their actual expenditure would be very much lower, and we asked the Assembly to provide a sum of only 22 crores in addition to the 4 crores required for the purchase of the Delhi-Umballa-Kalka Railway. actual expenditure during the current year is now expected to be 27 crores, or a crore more than was provided for, and we shall place a supplementary demand before this House in due course for the additional funds required. In the last few years, as indeed the House has noted on more than one occasion in the Budget debates, there have been considerable lapses in the amounts provided for capital expenditure, and this is the first year in which actual expenditure is likely to approximate closely to our estimate. We must, I think, congratulate the Railway Board on the success of its efforts to attain greater accuracy in estimates and to expedite the execution of sanctioned works. One of the methods adopted deserves a passing mention, for it represents a new and important departure. We are now beginning to make use of private contractors for important railway works. A number of important railway bridges are now being built for us by firms of contractors, the latest example being the rebuilding of the bridge over the Nerbudda on the Great Indian Peninsula Railway-main line which was washed away last summer. Another important work which has been entrusted to contractors is the elimination of the Bhore Ghat Reversing station on the Great Indian Peninsula Railway, and we hope that we may shortly be able to devise a system which will allow us to hand over to contracting firms the entire construction of some new lines. Of the total expenditure of 27 crores, just over 4 crores represents the purchase price of the Delhi-Umballa-Kalka Railway. Twenty-one lakhs roughly is the expenditure incurred in taking up new issues of share capital of certain branch line companies in which Government are financially interested in order to replace loan capital by share capital. This method is directly remunerative to us in that it adds to our share of surplus profits or reduces our liability to pay rebates. regards the balance, the expenditure on new lines is expected to be 6:47 crores, and on open lines 16:31 crores. The former figure represents a lapse of only 9 lakhs on the budget estimate. Progress on some projects has unfortunately been retarded by a variety of causes such as late receipt of imported material and unexpected delays in the acquisition of land. but on others it has been possible to accelerate the rate of expenditure. The principal sufferer has been the Raipur-Parvatipuram line where we now expect to spend less than a fifth of the 125 lakhs provided for the current rear. On open lines, expenditure has proceeded at a more rapid pace than we expected when the Budget was framed and our latest anticipation

As

is that the budget estimate will be exceeded by a little over a crore. This however is partly counterbalanced by a reduction of 50 lakhs in our estimate of expenditure from the Depreciation Fund which is a counterpart of the programme of open line works.

12. For the year 1927-28 the total amount of funds asked for by railway administrations is 39.77 crores. As usual we propose to authorise them to spend up up to the full amount they have included in their estimate, but we are asking the Assembly only to vote a sum of 25 crores as a whole, which we believe is at present about the limit of the administrations' capacity of spending. Of this total of 25 crores, we propose to distribute 762 crores to new lines (as against nearly 15 crores asked for by Agents) and to open line works the balance of 17.38 crores as against roughly 244 crores demanded.

13. The full details of open line works are, as usual, given in the budget memorandum and in the various pink books dealing with the estimates of new railways and I think it unnecessary for me at present to deal with any of the details of these estimates. I need only say that of the total amount of 24 77 crores, which it is proposed to distribute among Agents as desired by them, 19:41 crores are for improving open line facilities. Sums amounting roughly to 3 crores each are provided for improvement of track, for remodelling of station yards and for the electrification of lines and stations. The provision for doubling and quadrupling tracks, strengthening of bridges, workshops and stores and station buildings, and staff quarters amounts to about 6 crores. I would specially emphasise the large share that electrification of lines and stations has of the total expenditure. The total provision made is over 3 crores. The Great Indian Peninsula Railway alone accounts for nearly 2 crores of this. The projects include the electrification of the main line from Bombay to Igatpuri and Poona (costing altogether 5 crores) for which a crore is provided and the construction of the power house at Kalyan costing altogether 97 lakhs, for which 40 lakhs is provided in 1927-28. In this connection, I think that it would interest the House if I give them certain figures which I have extracted from a recent report on the Harbour Branch Railway of the Great Indian Peninsula Railway system. The section between Victoria Terminus and Kurla, a distance of 9 miles, was electrified with effect from 5th February 1925. By January 1927, I am informed the train miles on the section had increased by seven times and passenger traffic and earnings were 20 times as great as in the period prior to February 1925. On 3rd February 1926 the electrification of the Mahim Chord, an addition of 2 miles, was completed and the whole of the Harbour Branch Railway was operated by electric service. A comparison between the statistics of January 1926 with those of October 1926 shows that the train miles have increased four times, that passenger traffic has doubled and that earnings have trebled. I may also call attention to the provision of about 2 crores made for amenities specially intended for lower class passengers as separate from such general improvements as remodelling and electrification of stations and yards and improved train services from which also they derive benefit in common with others. The special amenities include arrangements for water supply, the increased provision of waiting rooms and halls and refreshment rooms and the improvement of booking facilities and sanitary arrangements, but the main item on which expenditure is to be incurred is nearly 1 crores under additions and improvements to lower class carriages. Under additions, the programme for

1927-28 contemplates 636 coaching vehicles and 552 of these are lower class carriages.

New Construction.

48

14. One of the most interesting parts of the Railway Budget is of course the programme of new construction. Our programme for next year will involve a total expenditure of 14 crores in the case of commercial lines, but we have thought it necessary to provide only 7:41 crores. The programme for both commercial and strategic lines is set out in full in the Budget memorandum. It includes lines covering 1,813 miles which are already in progress and 51 new lines extending to 2,827 miles. Thus, our immediate programme covers 4,640 miles. Only 338 miles of new line will be opened in the current year, but next year I hope that we shall see a more substantial return on the money we have spent on new construction in the last two or three years. For we hope to open in 1927-28 nearly 900 miles of new line. And my successor is likely to be more fortunate than I have been in his record of mileage added to the Indian Railway system: I am confident that the House will welcome this development, and will agree that we should press on with the construction of new lines. This is our policy. Each Railway Administration is charged with the duty of exploring every avenue that affords scope for the construction of remunerative lines of a standard suitable to the traffic that may be expected and of keeping in close touch with Local Governments in this important matter. In order to afford every facility for the achievement of this object, we do not propose to adhere to one rigid standard of construction. Obviously a standard that is suitable for a main line carrying heavy traffic may be needlessly expensive for a feeder line serving a comparatively small agricultural tract, and the Railway Board have now laid down varying standards of construction in order that branch lines and extensions may be built to whatever standard seems most suitable to the area to be served.

Rates and Fares.

15. I am sorry that I am not in the happy position of announcing any further reduction of rates and fares, but after what I have said earlier in my speech the House cannot have any expectation of boons of this kind. But it must not be thought that we have made merely the reductions in passenger fares announced last year. On the contrary, at the beginning of the current year we expressly invited Agents carefully to review their passenger fares in the light of statistics and we told them that we should be prepared favourably to consider further reductions. As the result of this letter, the Agents of the East Indian, North Western and South Indian Railways felt justified in proposing these further reductions and they have already been brought into force in one case from 1st January last and in the other two cases from 1st February. The reductions on the two State-managed lines are substantial, and third class passenger fares for ordinary trains are now down to 2 pies per mile for distances over 300 miles. The House may think that we have been unduly bold in sanctioning these reductions in view of the fact that the reductions previously sanctioned have not yet given any material stimulus to traffic. But the recommendations of the Agents were based on their considered opinion that ultimately it would pay them to bring down fares to the level suggested and we decided to take the risk. I would here emphasise the fact that it is only the existence of our Railway Reserves that enables us to

we have to remember that every make experiments of this kind. For year we are adding a sum of upwards of twenty crores to our capital at charge. Every twenty crores added to our capital means that we ought to obtain an increase in our net earnings of about a crore and twenty lakhs. For not only have we to pay our interest charges but in addition we have to pay one per cent. to General Revenues on our capital at charge. On the other hand, much of our new money goes into works which take time to become remunerative, and there is also the fact that we must expect large variations from year to year in Railway earnings in accordance with harvest results and trade fluctuations. All these considerations point to the need for prudent management, for unceasing strivings after economy and efficiency, and for a wise policy of building up reserves. But provided that we keep these essentials in mind, I think that we can face the future with confidence and that we need not hesitate to make such well considered experiments in the reduction of rates and fares as on the advice of our Agents we have so far embarked upon. But I have no doubt that the House will agree that the effect of such experiments must closely be watched and that if after a fair trial extended over a reasonable period they are found merely to involve us in a loss of revenue without bringing any compensating advantage in the shape of increased traffic, the matter may require reconsideration. But I hope that there is no fear of this result, and that we shall not merely be able to carry on the reductions that have been made but also to try further experiments, particularly in the way of reducing freights.

16. I have just referred to the need for unceasing striving after effi. ciency and economy, and I have done so quite deliberately. For I think that I may claim that however far we may have fallen short of our ideal, that has been our policy during the last five years. Some Members of the House, I know, think that we are too rigid in our adherence to this policy and they regard it merely as a rather souliess bureaucratic trait. But, believe me, it is not that. After all the Government of India and the Railway Board are responsible for what is, I suppose, one of the biggest commercial undertakings in the world. It is a business with a capital of something like 600 crores-say 450 million sterling. If we run it successfully, we provide India with a cheap and efficient system of transport. If we fail, the railways become a burden on the general revenues of the country. In some respects I think that we can claim already to have made satisfactory progress. I do not wish to repeat what I said last year, but every one will agree I think that our financial arrangements are on a much sounder basis than ever before and that we have made some progress in carrying out the recommendations of the Acworth and Inchcape Committees. But the Indian Railway system is a vast organisation, and recently in almost every year some new branch of our work has been brought under expert examination and review. This year it has been the turn of the workshops, and we have just published the report of the Raven Committee. Some people, I am told, call it an indictment of the Railway Workshops. It may be so, I am not particular about But the plain fact is that the Railway Board thought that State Railway workshops required overhauling in the light of the most modern workshop practice. We entrusted the task to two of the best experts we could find, and we have obtained from them what we wanted, namely, a frank outspoken report containing many valuable suggestions for improvement of our methods and our equipment. The publication of the report may expose us to criticism, but from our point of view the important

thing is that we now know the directions in which to work for economy and efficiency, and we propose to follow up the suggestions which have been made. Similarly, an enquiry is now going on into our methods of railway accounting and into our workshop accounts, and another enquiry has just been made into the medical and sanitary arrangements of one of our most important railways. I do not propose to enter into greater detail into the many other directions in which economies are being effected in the administration of our railway property as these are dealt with in Sir Clement Hindley's speech in presenting the Budget in the Council of State.

In other respects too, I think we are making advances. Last year we brought into effect the new recruitment schemes for the Indian Service of Railway Engineers and for the Transportation and Commercial Department, which were elaborated with the help of the Central Advisory Council. The first competitive examinations under these two schemes were held in November last by the Public Service Commission and as the result of those schemes 13 officers all of them Indians were appointed.

Whatever complaints this House may have against the Railway Boardand we shall hear more of this matter next' week-no one can accuse them now of sitting at Simla and Delhi and being entirely immersed in office work. Every year now every headquarters of a Railway Administration is visited by a Member of the Railway Board, and I who see their tour notes regularly know how valuable these visits are. The local Advisory Councils too are doing excellent work. They vary, of course, some being better than others, but from the personal testimony of Agents themselves I am aware that they are most useful in bringing Railway Administrations into touch with public opinion.

17. And now, Sir, I propose to bring to an end this the last account I shall give of my stewardship of Indian Railways. I am conscious of its deficiencies, and there are many other things that I should like to say, but I am afraid of wearying the House. I am sorry that I end with a less prosperous year than some of its predecessors, but at any rate it is a much more satisfactory budget than the one I had to defend in this House 5 years ago. No one could have had more loyal and devoted assistance than I have had from Sir Clement Hindley, Mr. Sim, Mr. Parsons and from Railway Officers generally, and as for this House, Sir, though I have had much criticism, I like to think that it was kindly criticism and there is not one of us on these Government benches who does not realise the value of the close scrutiny to which our budgets are subjected by the Legislative Assembly. (Applause.)