The Hindu Business Line : ON A NEW TRACK

Presenting his third Railway Budget, Mr Lalu Prasad must be aware that as Railway Minister he is presiding over momentous changes in the way the network has operated all these decades. For the second year in a row the Minister has unveiled a series of policies that emphasise efficient utilisation of existing resources instead of the age-old tendency of seeking additional resources. In this sense the Railways has shown itself capable of joining the other sections of the economy in the quest for productivity of existing capacity. The largest rail network in the world is at last getting business-like and that is a movement to be welcomed.

The shifting emphasis towards business practices is reflected in the strategic thinking behind this and last year's Budgets. Compared to the last edition, which stuck to the old script of expansion of railway infrastructure, modernisation and renewal of assets, the current one talks of introducing commercial, operational and investment-oriented initiatives in the freight sector. Among others this included a series of public-private partnerships in wagon usage, innovations to tighten the slack in wagon turnaround time and loading capacity, The latest Budget treads the same path with more initiatives to shore up productivity in freight traffic as for instance, the dedicated freight corridors in the western and eastern corridors at an investment of Rs 22,000 crore.

The initiatives also extend to passenger traffic. For the first time in recent memory, the Railways has introduced incentive schemes to draw passengers with differential pricing that are quite common in public utilities around the world, especially the aviation industry. By offering different rates for peak and non-peak hours, busy and non-busy routes and a frequent flier-like scheme, the Railways has shown that, as in the freight sector, unilateral rate price hikes are not the only way to increase revenues. Like last year, the latest Budget spares the passenger and freight sectors. In the absence of any other mitigating polices, such benevolence could have been populist. With the initiatives aimed at better utilisation of capacity in freight haulage and a differential rate mechanism for passenger traffic, the Railways has moved into an efficiency mode that will stand it in good stead.

There is evidence that this is already happening. Last year's Revised Estimate showed that passenger traffic moved up 3 per cent but revenues climbed 8 per cent. This Budget's figures show an uptrend too. But having said that, some strains of populism still creep in. Last year, 46 new lines were announced; this Budget plans 55 more. The need for extension of services cannot be denied, but new lines must also be guided by the same principles of efficiency that are being applied to existing routes. Budgets used to be called good if they were populist; now they should be called that if they innovate for better revenues.

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