New Delhi, February 24:

Indian Railways, which five years ago was on track to bankruptcy, announced a record financial surplus on Friday and a slew of fare cuts and massive spending on new lines in a populist budget.

Railways minister Lalu Prasad Yadav, announcing the budget for the financial year to March 2007, said the sprawling state-owned railway, had built up an unprecedented surplus of Rs 110 billion ($2.47 billion).

“There has been a turnaround in the financial situation of Indian Railways,” said the maverick minister, known more for his championing of the downtrodden and political theatrics than as a financial manager. “With this unprecedented achievement, we are striding towards making Indian Railways the premier railway of the world,” he said. The surplus, driven by higher freight loads thanks to a booming economy, came after a government body five years ago warned the over 150-year-old network was facing bankruptcy with a surplus of just Rs 3.5 billion.

The railway, built by India’s former British colonial rulers, has some 1.6 million employees, making it the world’s biggest civilian employer and is one of the world’s biggest networks. Taking on the new lost-cost airlines which have been taking away passengers, Yadav slashed the already rock-bottom fares by up to 18 per cent and announced loyalty reward fare schemes and non-peak discounts for passengers and freight traffic.

To meet rising freight transport demand, Yadav announced a record spending of Rs 240 billion — the most ever— to expand the network, including dedicated freight corridors on eastern and eastern routes. “It is important to increase the reach of the railways,” the minister said.

Yadav held most freight fares unchanged and cut those for diesel and petrol. He announced 55 new trains for the railways, which already runs around 14,000 trains daily. In a budget that came ahead of elections in five states, Yadav unveiled as well plans for a new air-conditioned ‘Garib Rath’ or ‘Poor Man’s Chariot’ to run on a pilot basis with deep discount fares.