Railway Minister Lalu Prasad's decision to cut freight rates and rationalise tariff structure is part of his plan to increase revenues from goods traffic, which contributed nearly two-thirds of its income in 2005-06.

The Railways earned 64 per cent of its revenue from goods traffic in 2005-06, while passenger traffic contributed 29 per cent. The remaining 9 per cent of the income came from miscellaneous sources, according to the Railway Budget documents tabled in Parliament on Monday.

Total receipts during 2005-06 stood at Rs 56,752 crore (Rs 567.52 billion).

Goods traffic pitched in with around Rs 36,287 crore (Rs 362.87 billion) while income from passengers was Rs 15,126 crore (Rs 151.26 billion). The total revenue is expected to increase to Rs 73,442 crore (Rs 734.42 billion) in 2007-08.

On the expenditure side, the country's biggest employer spent 28 per cent on wages and allowances to its 1.4 million-strong workforce. Besides, another 12 per cent went to the pension fund. The Railways' total expenditure in 2005-06 stood at Rs 46,609 crore (Rs 466.09 billion) and is projected to rise to Rs 57,420 crore (Rs 574.20 billion) in 2007-08.

Rising oil prices also affected the organisation as it spent 18 per cent of its total expenditure to run the world's second-largest rail network that spans nearly 64,000 km.

The allocation for paying dividend was seven per cent during the year under review. The organisation paid nearly Rs 3,950 crore (Rs 39.50 billion) as dividend to the government in 2005-06. While 7 per cent of the Railway expenditure went in the depreciation reserve fund, another 4 per cent was earmarked for development fund, 7 per cent for the capital fund and one per cent for safety fund.

• Railway Budget 2007-08: Complete Coverage