Economic Highlights

New Delhi, 27 June 2014

Railways Malaise

NO LOSSES, LACKS WORK CULTURE

By Shivaji Sarkar

The Narendra Modi government is functioning well where it is guided by political wisdom. At least two decisions – cancelling of four-year undergraduate programme (FYUP) of Delhi University and postponing of KG D6 gas price increase – are people friendly indicating may be ‘achhe din’ (good days) are not far away. However, it falters when it accepts the bureaucratic skewed arguments as in the case of increasing railway fare or raising custom duties on imported sugar.

The FYUP was definitely aimed at increasing income of private education shops. The Delhi University was a test case. It was made to don it by the UPA’s HRD Minister Kapil Sibal on a specious argument that this poor country needs equivalence with the US. (The US itself is now mulling to reduce the period to be spent on education). The end result was that it was burdening each student a minimum of Rs 1.5 lakh a year. Sibal possibly could afford to do it. He can pay a rent of Rs 16 lakh per month in a country where the UPA’s Planning Commission had termed an income of Rs 26 a day enough to put one above the poverty level.  That is the level of disparity. What Sibal can do, the aam aadmi cannot.

Yes, Sibal and the then Union Petroleum Minister Veerappa Moily could pay higher gas price as well. But a person earning Rs 26 a day or even a government employee, with the Sixth Pay Commission perks, does not have the capacity to pay that. Besides, why should a country pay even $4 a unit presently being charged for the gas when ONGC itself says that the cost of production is far below $2. There is a case, this Government possibly has realized, for reducing the gas price. It is vital to keep energy costs affordable lest the entire economy collapses. The UPA had lived for the large corporate, a people’s government cannot afford to do that.

On sugar, there is a case for revival of the domestic industry. It is having a wee bit of a problem. But Nehruvian concept of securing it from competition also needs a review. Higher import duties have immediate effect of a higher sugar price in retail. If internationally sugar prices are lower, even including shipping charges, than that of India, it calls for a review why the domestic sugar industry could not produce it at a lower price. It is an organized lobby. The former UPA food minister had also been lobbying for them. Such decisions have deleterious effect on overall price situation.

The railway officials also successfully presented an untenable case to get the fares and freight hiked. The CAG reports 9 and 25 needs to be read to find out the level of inefficiency in the railways.

The political masters need to study the last ten years budgetary and non-budgetary provisions which have increased railway earnings continuously. Even in the years it did not raise fare officially, it raised various fees and cancellation charges. The cancellation does not cause any loss but those booking tickets are made to lose from 30 to 50 per cent of the fare charged. It is unethical, illegal and extortion. The railways never give the figures of their earning from these sources but it can be estimated that it earns at least 15 per cent of the revenue for not giving any service.

Interestingly, the railways have devised another way of earning. On one confirmed PNR at least two additional passengers travel without a berth, including in Rajdhanis. So selling one berth it gets paid for three.

Is the Railways really in losses? Certainly not. Railway Board Chairman Arunendra Kumar the very next day of the 14.2 per cent fare and 6.5 per cent freight was hiked, told the media that in reality the railways were not in losses “but had the fare and freight not been hiked it could have been in losses”.

A discerning reader can understand how Rail Board officials have taken the new masters for a ride. They are making everyone believe that railway finances have stagnated during the past ten years. The truth is different. In 2003-04, the railways had earned Rs 13,298 crore from passenger fares. In 2013-14, the last interim budget, it earned Rs 32,500 crore.

Further, freight earnings have increased phenomenally. In 2003-04, it earned 27,403 crore, in 2004-05 Rs 30,429 crore and in the last fiscal it rose to Rs 85,000 crore due to dynamic freight – increase whenever you want - policy.

In 2013-14, its total earnings were Rs 1.25 lakh crore and in 2014-15 it is expecting to rise to Rs 1.43 lakh crore, an increase of Rs 18,062 cr without the proposed increase of fare of 10 per cent fare, said the last UPA Rail Minister Pawan Bansal. So the new Rail Minister Sadanand Gowda needs to understand that he can do without the Rs 8,000-crore additional accrual that the UPA appointed bureaucrats made him do. It not only empowers him to roll back the fare but also reduce cancellation charges to the previous Rs 10. It also gives him the power to question the bureaucrats why they misguided him.

A roll back would not cause any loss to the railways but it would start a process of review how railways have been losing money where they need not. It also calls for checking the lackadaisical attitude of the railway officials on maintenance. The CAG has repeatedly pointed out that it did not lack in fiancés but in the attitude. In its various reports, the CAG had cited how different railway zones and departments returned money unutilized for upgrading various projects, including on safety.

A CAG audit in 38 of 55 divisions revealed that the Railways had failed to bring down the detention of freight trains for examination (from its arrival to its departure after TXR examination) to the stipulated 11 hour. It introduced roll-on-roll-off-freight programme for door-to door service in 2005. Since it required aggressive marketing, it was quietly shelved. It has continuously been losing goods to road traffic and has not done a bit to recapture it.

The sudden uncoupling of trains, running of rakes without engine, train reaching south instead of going to Porbandar and random cancellation of trains are some of the regular malaise.  None of it requires additional funds for upkeep. Gowda should put the rail house in order and ensure work culture first before going for the most expensive bullet train. The politician in him needs to show who the master is.--INFA