Ms Banerjee had a long and detailed meeting with her ministry officials on Saturday night in New Delhi to finalise the budget proposals. She has been arguing against increasing the fares despite pressures from finance ministry and the prime minister's council of economic advisors to do so in order to mobilise additional resources. Railway ministry sources say that even if about Rs 250-300 crore were raised through fares hike, it will not improve the financial health of the railways. However, the political fall-out of this increase would cost Ms Banerjee's Trinamool Congress dearly in the assembly polls in West Bengal scheduled to be held soon after the budget. Ms Banerjee contends that the railways have a social obligation to build new line projects and therefore deserves help from the finance ministry. Central assistance to the railways came down from as high as 89 per cent during the first five-year plan to nearly 30 per cent currently.

For instance, the railways had to run over 40 trains to transport the quake-hit and rush relief materials free of cost to affected areas in Gujarat.

Last year, the railways organised a similar effort in the aftermath of the Orissa cyclone.

Ministry sources said that expenditure incurred for fulfiling such social obligations, operating many non-viable new line projects, besides the additional burden of rising fuel prices and the implementation of the fifth pay commission's obligations have put additional financial burdens on the railways. They say that projects worth Rs 35,000 crore, many of which had been initiated just to fulfil political obligations, were pending because of a shortage of funds.

The railways need Rs 15,000 crore for upgrading and modernising safety-related signalling and communications infrastructure as recommended by the high-powered Justice (retd) HR Khanna committee, which was set up to probe into the causes leading to the train mishap near Ambala in 1998.