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Depoliticized Budget: INDIAN RAILWAYS ON NEW TRACK, By Shivaji Sarkar, 27 Feb, 2015 Print E-mail

Rail Budget

New Delhi, 27 February 2015


Depoliticized Budget

Indian Railways On New Track

By Shivaji Sarkar

 It is unusual to have a Railway Budget without its politics, populism, regional angularities. Railway Minister Suresh Prabhu seems to have made an effort at professionalizing the country’s biggest commercial lifeline that has been gasping for over two decades. Surprisingly enough he has stressed to improve points which affect travellers daily.  

No introduction of a new train is another seemingly sanguine decision. It hints at his bid for improving management of the existing trains, particularly the slow poor man’s trains like Janata Express. These are the most important ones. When these do not run on schedule, all other so- called superfast and VIP trains are crowded.

The slow ones connect villages and hinterlands, which do not still have a transportation system or even a rudimentary road. If Prabhu can revive those trains, which once were most sought after, he would do a great service to the nation for de-crowding the trains and bringing back a semblance of efficiency, that once railways was known for. Let us at least believe his assertion in Parliament that he would lean more on improvement of existing system as it is “cheaper, cost effective and easier to do than having a new set of baggage”.

He has been praised for not increasing fares. That is partially correct. Last June, his predecessor Sadanand Gowda had increased 14.2 per cent fare and 6.5 per cent freight netting Rs 8000 crore, despite the admission of Railway Board Chairman that in reality the railways were not in losses “but had the fare and freight not been hiked it could have been in losses”. This was because of petroleum price hike and a part of the fuel adjustment component (FAC). Prabhu had the option to give it back to the people as he has saved over Rs 2000 crore because of fall in fuel prices.

He is being criticized for rationalization of freight leading to 10 per cent hike in the movement of food grain, fertilizer, steel and some other products. In fact, he need not have brought it in his budgetary process. Since the time of Former Railway Minister Laloo Yadav, freight is on an automatic system called “dynamic structure”. It ensures virtually continuous “revision” – rise - of freight all through the year. Freight has virtually been taken out of the budgetary purview and the minister has little to do with it. It has led to diversion of goods traffic to the road sector too.

Now those who are heaving a sigh of relief for not increasing fare need to read the fine print. Prabhu said he would set up a “regulator”, for monitoring his works as well as the kind of fare he would be charging. This is a broad hint. Fare may take an upward trend.

Prabhu needs Rs 8.5 lakh crore during the next five years to revamp the railways. His White Paper explains the problems and indicates the five-year road map of leading to world class travel.  He wants to raise a substantial part from internal resources. A “dynamic fare” could keep his kitty growing.

Those who today said he has put the people before populism might change tack. But they would also have to realize that at least he has suggested better ways to raise the finances. Plan outlay has been raised to Rs 100,011 crore, a whopping never before 52 per cent increase for infrastructure building. It shows the concern of Prime Minister Narendra Modi and Finance Minister Arun Jaitley as well, who consented to extend such finances. The Plan outlay would be financed through internal resources and Rs 5781 crore through public-private-participation (PPP).

The NDA Government also assured Rs 40,000 crore for the railway’s annual budget, almost Rs 9000 crore more than last year. Besides, Prabhu gets Rs 1645.60 crore provided as diesel cess from Central road fund. One part of finances would come from market borrowings of Rs 17655 crore, an increase of Rs 5609 crore from the last budget about 46.5 per cent. There would be a cost for multi-dimensional “swachh rail, swachh bharat”. It is being assessed.

To keep fiscal deficit low, and help the Finance Minister, railways would now borrow from multilateral and institutional financiers. A major part for his five-year vision would come from the World Bank, Asian Development Bank and International Finance Corporation apart from other agencies. They provide developmental assistance at nominal interest. The NDA Government has allowed railways to have direct funding and manage it. Else the government would have to raise borrowings. It would reduce many bureaucratic steps and also make railways utilise borrowings in a more sanguine manner. This happens less with easy budgetary support.

The task ahead is not easy. Prabhu has to fund for the hi-speed bullet-like train sets on existing tracks. The trains would run without a locomotive engine. The real bullet train is also his concern. It would cost Rs 60,000 crore, almost Rs 650 crore for initial steps to fulfill Modi’s vision. The track is slippery.

Prabhu should be wise. Instead of Indian Railways (IR) taking up the bullet train, it should set up a separate body to build track, operate and finance. Railways should only be a consultant and charge fees from it. This would make Prabhu’s jobs for the common man easier.  

He has to come out with a wider vision for the North-East. It would require Rs 5225 crore to connect regional capitals - a pious mission. There are some other States and hill States like Uttarakhand and Himachal Pradesh, which also want similar projects. Prabhu needs to give a thought. Either he can have separate bodies or can consider allowing States to set up their own railways. The IR could be consultant or operating partners. This could make his behemoth financially sound and managerially efficient. These are not new ideas. The Konkan and Metro rails are living instances of such entities.

If Prabhu does not do it, his major corridor mission, doubling tripling and quadrupling of busy tracks may once again bump into problems. He has apparently done a workable proposition of taking PSUs like Oil India, GAIL, SAIL and Coal India on board for making them agree to invest in his new tracks. The mission to allow trains in the name of companies though may bring him money but it defaces trains by covering with company posters, as the Delhi Metro. Public property should better not have such moving hoardings.

To sum it, the rail budget has a road map. If Prabhu can tread on it, one can expect a cleaner, faster, less crowded system. If it succeeds it may begin a new culture. ---INFA

(Copyright, India News & Feature Alliance)


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