J. Srinivasan

After turning up with results that would turn most tycoons and corporate honchos green with envy, did the usually savvy Railways Minister, Mr Lalu Prasad, miss a bet in making political capital of the performance of a monolith when much else of the economy is feeling the pressures of the financial downturn?

Or, was it political strategy that made Mr Lalu Prasad keep a low profile? For, too much of crowing could get political opponents screaming, especially with elections round the corner. Understated, the impact is often more.

Sure the Railways has suffered a setback in freight loading following the slowdown, but the transformation of the monolith over the last five years, presided over by Mr Lalu Prasad, is not to be sneezed at.

In 2001, the Railways did not have funds for replacement of aged assets and had to defer payment of the Rs 2,800-crore dividend. Since then it has managed a turnaround. And how. Today, it has accumulated reserves of Rs 90,000 crore and has just paid a dividend of Rs 4,700 crore-plus.

Little wonder that at a time when even Fortune 500 companies are finding it difficult to raise debt from the international markets, the Indian Railway Finance Corporation last November raised a $100-million loan at 4 per cent, from the international market.

Heavy investments

Even as private companies resort to retrenchment of employees and pay-cuts, the Railways implemented the Sixth Pay Commission recommendations with relative ease, benefiting about 14 lakh employees and 11 lakh pensioners.

In the last five years the Railways has stepped up the annual growth rate of freight loading from an average of 3 per cent during the 1990s to an average of 8 per cent. All this has given the Railways the ability to invest Rs 2.3-lakh crore in the Eleventh Plan to improve its productivity. This would be three times the amount invested in the Tenth Plan.

As Mr Lalu Prasad said, “heavy investments will have to be made for enhancing capacity of rolling stock, technical upgradation and advancement in technology to achieve the ambitious targets set for passenger and freight business segments, in the 11th Five Year Plan… The objective is to increase the transport capacity of the Railways and to reduce the unit cost of operations.” The Railway PSUs will be the key beneficiaries of this largesse but the private sector will also benefit from sub-contracts and supplies of parts, etc.

Just the production of wagons is set to increase from 6,600 per annum to nearly 15,000 (vehicle units) and diesel and electric locomotives from 202 to about 480.

Production of covered and open wagons of new design has begun, and is expected to lead to a 78 per cent increase in capacity of goods rakes. These trains can now carry 4,100 tonnes compared with 2,300 tonnes earlier.

Benefits for industry and passengers

Industry could also benefit from the initiatives on the passenger front. Reduction of fares and introduction of new trains mean more passengers to cater to. Increasing and improving the services offered in trains and at stations could enhance the rail travel experience, leading to a virtuous cycle of better-service-more-traffic.

Adopting modern technologies to serve users better could translate into outsourcing of services — for instance, enabling ATMs and petrol pumps to issue tickets.

The Railways plans to invest Rs 37,905 crore in 2010. It expects cash revenues of Rs 19,320 crore. It hopes to spend Rs 37,900 crore in FY10. All go to prove the robustness of the Railways.

In normal times, surely the Minister, his party, and the coalition it belongs to would have gone to town over this. Yet, all are keeping an uncharacteristically low profile. Is that the power of the polls?

(This article was published in the Business Line print edition dated February 14, 2009)
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