The Hindu Business Line : Rail Budget: How to have the cake and eat it too

New Delhi, Feb. 26 Predictably, the Indian Railways has not dampened its ardent admirers that it would continue with its now legendary reputation of how to run a massive transport network of men and material without effecting any price adjustment, both passenger and freight, at least on paper proclaimed through the annual ritual of the Rail Budget.

For a Minister given to fanfare and panache, the Union Railway Minister, Mr Lalu Prasad, used his rustic wisdom to drive home the point that in a coalition era of governance regional satraps like him can have the cake and eat it too, much to the delight of awe-struck people and to the discomfort of the level-headed.

The Railway Board Chairman, Mr K.C. Jena, in the post-budget briefing declared that 18 million people travel by train daily which amounts to carrying more than the entire world’s population on IR every year!

A cursory look at the explanatory memorandum on the Railway Budget would be an eye-opener as to how this monolithic public sector is going about its business. Out of every rupee the system earns today, as much as 65 paise is emanating from goods traffic earnings. It is small wonder that in the name of rebalancing rates or reclassification of commodities and resort to surcharges on high-priced commodities and sundry legerdemains, the Railways sedulously exploit every avenue in this milch-cow segment of the system.

In fact, even the 26 paise passenger earnings contribute to every rupee the Railways earns, they need to be cross-subsidised by the freight! The balance nine paise the Railways earn from other coaching earnings, sundry other earnings and miscellaneous receipts of three paise each respectively.

On the expenditure front, the Railways spent a considerable chunk of 26 paise of every rupee it expends on the staff of wages and allowances. With the Sixth Pay Commission recommendations in the offing, the system must perforce provide additional thousands of crores to its legion of employees.

If important segments such as capital fund (13 paise), Depreciation Reserve Fund (7 paise), Development Fund (3 paise), Special Railway Safety Fund (1 paise) are factored in, the total expenditure on maintenance and creation of assets for such a gargantuan organisation like the Railways is hardly 25 paise out of every one rupee it spends! With ambitious plans for high density network (HDN) of 20,000 km at a colossal cost of Rs 75,000 crore, induction of additional diesel locomotives, electric locomotives and wagons, let alone providing safety and comfort to travelling public through improved passenger amenities or adding new ones, the amount being expended for maintenance of assets and creation of new ones or strengthening security through induction of modern signalling and telecom as it obtains today is a pale shadow of what is substantially needed by the system over the long haul.

It is not that Railways do not have the benefit of sound suggestions for divesting some of their non-core activities to make their basic remit of train operation a paying proposition. Committee after committee and international lending institutions and regional lending banks such as the Asian Development Bank have underlined the need for roping in private participation in some of the non-core areas so that the system is not burdened with unwieldy managerial responsibilities and lack of functional autonomy to earn income for funding its own development plans in a futuristic scenario.

In the last budget, bullet trains were mooted but they remain on the drawing board for want of purposeful initiative at the highest level to improve the operational efficiency and utilisation of available resources through activities that would multiply income and generate surplus for development. It is time that the railways were freed from the political appanage and given the autonomy to be a board-managed corporate entity that could go to the market and find its niche!

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