Platform for the future

A separate Railway Budget is a relic of India’s colonial past. The Railways, too, was threatening to become just that — a colonial relic, out of sync with the current needs of the economy. If nothing else, the vision document that Railway Minister Suresh Prabhu has presented in the form of the Railway Budget for 2015-16 has the potential to transform the Railways into not just a modern, efficient and commercially viable organisation, but a growth engine for the new economy. Perhaps the biggest indicator of the departure from the past lay in what was not in the Budget, rather than what was in it — the customary announcements of a rash of new trains, as well as the usual projects and proposals for VIP constituencies and poll-bound States. Instead, Prabhu’s plan is far more visionary: in five years, he wants to expand the Railways’ footprint by as much as a third. This he hopes to achieve by increasing passenger capacity from 21 million to 30 million passengers a day, raising track length by a fifth from 1,14,000 km to 1,38,000 km, and upping annual freight carrying capacity from 1 billion to 1.5 billion tonnes. These are commendable goals, even if rather ambitious. Even more challenging are his plans to transform the 1.3 million-employee behemoth into a customer-centric, quality-oriented organisation, which ceases to look at its customers as grateful recipients of public largesse, or, in the case of freight users, milch cows to be squeezed to fund populist excess.

Doing this will cost money. Even the relatively limited goals Prabhu has set for his government’s term in office — decongesting key heavy haul routes, doubling or tripling tracks on trunk routes to increase average speeds, improving safety and providing basic passenger amenities both on board and in stations, such as clean toilets and safe drinking water — will cost an estimated ₹8,56,021 crore. The Railways will be able to fund only a small portion of this from internal accruals. For fiscal 2015-16, Prabhu plans to increase capital spend to ₹1,00,011 crore. The Union Budget will fund 41.6 per cent of this bill, while internal resources — despite a projected doubling of surplus to over ₹14,000 crore and reducing the operating ratio (the proportion of its earnings the Railways spends to keep running) to 88.5 compared to 91.8 at present — will cover another 17.8 per cent. The rest will have to be borrowed.

While the move to create a special purpose vehicle to raise long-term funds is sensible, one wonders whether States will buy into Prabhu’s plans for cooperative federalism by diverting their resources towards creating railway infrastructure, in the absence of financial or political returns for themselves in doing so. It is also disturbing that an otherwise progressive Budget failed to address the issue of passenger subsidy and raise passenger fares. All in all, however, his Budget checks the right boxes in terms of intent. It is now time to deliver.

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