The Hindu Business Line : Red flag to reforms

THERE IS NO element of surprise in Mr Laloo Prasad Yadav's maiden Railway Budget. Compulsions of coalition politics would have seen to it there is no revision in second-class passenger fares or for that matter freight rates. Given the narrowing gap between budget air travel and air-conditioned two-tier sleeper fares, a hike here too is largely ruled out. The Railway Minister has made only a feeble attempt by making adjustments here and there but on the whole producing a budget that is far too timid. Resorting to borrowing allows Mr Laoo Prasad Yadav add to the benefits enjoyed by the 14 million passengers using the Asia's oldest railway network everyday. Sans cuts in manpower or subsidies, his proposals will make barely a dent in the total cost. Doing away with populist measures, though desirable — indeed essential — is perhaps too much of an ideological challenge. There are not even a few feints at reforms.

The need for bolder action springs from the current and prospective size of the investment the Railways will need. The 153-year-old, 100,000-km-long network will need huge amounts in the next few years for wagons, locomotives, coaches, bridges and more lines as also to improve capacity and safety. Repairs are needed for at least a third of the tracks that have been the cause of innumerable accidents, claiming thousands of lives. A huge dose of improvement in productivity besides some rationalisation in fares and freights was essential to mobilise resources for modernising services. Freight, accounting for two-thirds of the Railways' revenues, rose at an average 8 per cent a year in nine of the past 10 years. The Railway Minister proposes round-the-clock loading/unloading in terminals. Is he suggesting change in demurrage rules also? The faster evacuation of wagons from ports will depend on the efficiency of the facility concerned, not necessarily of the Railways. The freight target for this fiscal suggests a volume growth of around 4 per cent. At a time when the Planning Commission is talking about 6-8 per cent GDP growth, such a modest growth target is untenable. But, then, bigger target also means larger investments. Where is the money to come from?

Unfortunately, Mr Laloo Prasad Yadav has not addressed the financial issues at all. All the new trains introduced, without caring for their financial viability, appears like distribution of political largesse. There are no attempts either to simplify the commercial rules and procedures, which are cumbersome and archaic and lock up huge amounts of money in litigation for years, or to introduce such radical measures as flexibility in rates or progressive segregation of the passenger and freight corridors as the operational and technical requirements of heavy-duty goods trains and high-speed passenger trains are totally different. Nor is there any suggestion to re-route traffic so important in the present situation. The safety issues have been addressed, but in the same old fashion, sans new directions. One only hopes the promised acquisition of wagons will happen and help meet the rising demand for freight traffic. Historically, one of the biggest problems has been that the recurring episodes of fiscal duress have been dealt with by cutting public spending even while shelling out ever more on wasteful programmes. If the Rail Budget proposals are a signal to the spending programme of the Finance Minister, then one can expect subsidies to continue and more spending on pro-poor programmes. A farewell to reforms?

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