The Hindu Business Line : A contrarian view

Before attempting to analyse the salient features of Railway Budget 2009-10, certain vital points are required to be examined in their proper perspective.

Apart from the job of fixing targets for passenger and freight traffic for the year, a Railway Budget, in people’s perception, has three components — whether there will be an increase in passenger fare or freight charges; the number of new trains introduced; and the projects that have been prioritised.

Over the years, Railway bureaucrats and successive Railway Ministers have perfected the art of bypassing all the three areas in the budget.

Increasing the freight charges by changing the “classification” of goods is an old ploy first tried by the redoubtable Mr M. S. Gujral, ex-Chairman, Railway Board, in the early 1980s.

By this method, the classification of partial commodities was changed vis-À-vis the “base rate”, thereby increasing the effective fare.

In the last five years, though in every budget there was a solemn promise that there would be no increase in freight charges, the effective fare of iron ore did go up by almost 125 per cent, on an average, and that of coal by about 60 per cent through reclassification.

Similarly, by introducing such charges as “congestion surcharge on busy route surcharge”, effective charges were linked post-budget. In passenger fares too, more and more berths were allotted to the tatkal quota by administrative orders.

The computer reservation charges were also “rationalised”, a euphemism for increase. Any number of new trains, not announced in the budget, was introduced.

Even the present Railway Minister announced a new express train between Howrah and Digha without waiting for the budget.

Where is the money?

The allocation of funds projection keeps on getting changed. A question, therefore, arises: Is there any need for a Railway Budget at all, when major decisions can be taken by administrative orders?

Of vital importance is the announcement in the Railway Budget that there will be no increase in passenger fares or freight charges.

If there is no rethinking of increases through the back-door, as was done in the past, the problem remains as to where the money for development works will come from.

By her own admission, the Railway Minister stated that in 2008-09 freight loading fell short of the target of 17 million tonnes.

In 2009-10 also, only 47 million tonnes of additional freight traffic has been projected. All the income projected for non-conventional sources are too meagre to be taken into consideration.

With no increase in passenger fares, many new passenger trains and introduction of Rs 25 monthly season ticket, it is apprehended that cross-subsidisation of passenger traffic by freight traffic will not only continue but also increase.

Moreover, it appears that this budget also marks a departure from the established policy of hiving off the unremunerative and non-core activities.

Taking over the sick industrial units will add to the problem. However, setting up captive powerhouses is a step in the right direction, as is the setting up of production units.

Polishing old ideas

Certain announcements packaged as new ideas are old ones. Double-decker commuter coaches used to run long ago on the Mumbai-Pune and Howrah-Dhanbad routes.

When the Rajdhani Express was first introduced in 1969, it stopped only at Kanpur between Howrah and New Delhi, though it had operational stops at Gomoh and Mughalsarai.

Northern Railway then ran a non-stop train between New Delhi and Lucknow. Therefore the ‘turant’ trains and double-decker coaches are old concepts.

More important is the announcement of extension of the Kolkata Metro. It is a clear departure from the extant policy. Because of the declared inability of Indian Railways to put in place Mass Rapid Transport Systems in urban metropolises, this task was undertaken by the Ministry of Urban development, with participation of private players or the State Government concerned.

It remains to be seen whether the proposed extension of the Kolkata Metro is a one-off gift from the Railway Minister and marks a change in policy.

The earmarking of stations as ‘adarsh,’ or world-class stations, does not change the ground realities.

Model stations

So many stations were developed as model stations but, except a few, the improvements at many of these ‘model’ stations are barely visible.

Therefore, unless the “implementation” is improved significantly, nothing is going to change.

One idea may be to improve one station at a time, instead of distributing the scarce resources among many stations, thereby achieving no significant improvements.

As far as implementation is concerned, the Railway faces a massive cost and time over-run in most projects. This calls for an immediate review of contract management, as almost all railway projects are executed by contractors. There is a scarcity of resourceful and technically competent contractors, particularly in the electrical and signal departments.

In Northern Railways, for instance, route relay interlocking projects, vital for improvement in operations and safety, are badly delayed as Siemens is the only contractor in all major areas. This requires an in-depth study and remedial measures at the earliest.

Overall, the budget is only what is expected from a populist politician, following the trend of her predecessor, with no mention of the structural and organisational reforms that are overdue.

Adoption of cut-paste and popular methods will not make the Indian Railway fit to meet future challenges, when the economy turns around again.

(The author is a retired Railway official.)

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