The Hindu Business Line : Steaming ahead

The Railways aim to upgrade services and efficiency on a dramatic scale. And innovation and private participation are essential ingredients of this vision.

It is by now a somewhat self-evident truth that Railway ministers present populist budgets; so, Mr Lalu Prasad’s budget for 2008-09 comes as no surprise. But the populism is so measured, so routine almost, that given the financials it appears like a reward to the nation for having helped the Indian Railways break several myths about the relationship between subsidised fares and their impact on profits. For years, critics have blamed subsidised passenger fares for the below-average results the Railways posted; in 2001 that record was so bad that the Railways almost defaulted on dividend payment with fund balances at just Rs 359 crore. Now, the Railways has run up a surplus of Rs 25,000 crore, compared to Rs 20,000 crore last year and Rs 14,500 crore the year before that.

With that kind of cash surplus, Mr Prasad could afford to be generous; he has reduced various passenger fares between two and seven per cent, and freight on petrol and diesel by five per cent. Women of all ages, from girl students to senior citizens, get more concessions and Bihar gets one more rail captive power plant. But Mr Prasad’s moderate populism also breaks with tradition significantly on two counts: one, his emphasis on technology upgradation and, two, its multiplier effects on the economy. Unlike in the past, when railway ministers simply initiated modernisation plans, Mr Prasad aims to upgrade the quality of services and efficiency on a dramatic scale. Three elements can be noted in the strategy. First, the Plan outlay has risen steeply to Rs 30,000 crore; second, the sectors for which the budget allocations are made and time-bound projects planned have been clearly outlined; for instance, wagons and coaches are to be replaced faster with higher output — up from 6,300 wagons in 2003-04 to 20,000 the coming fiscal. But the stress will be on new designs to replace the two-decade-old wagons with high-capacity stainless steel units. At the other end, IT systems are to link the entire network such that, in two years, ticket counters are eliminated.

Third, all these changes are in sync with a vision two decades ahead that includes innovation and private participation as essential ingredients. Unlike previous budgets, the present one should have a deep impact on the economy, especially on those sectors likely to cash in on its modernisation drive. The Railways should join the infrastructure sector as one of the key drivers of growth in the medium to long term. That would be quite a distinction.

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