Down the populist track again

The Rail Budget for 2011-12 confirmed what many had feared: frozen fares and a slew of projects. But then, the Railways Minister, Ms Mamata Banerjee, cannot be faulted on this score. This was the eighth successive Rail Budget that did not touch fares. The Minister's predecessors did the same thing: playing to the gallery.

This is presumably because the Railways in our country are perceived not merely as a transporter of goods and passengers and provider of services, but also as a vehicle for social change.

The railway network hauls over 22 million passengers and more than two million tonnes of freight traffic everyday. It is the country's biggest public utility, employing 1.4 million people.

The Railways, therefore, is often found straying into “socially important” areas which do not fall strictly within its core activities. Infrastructure-wise, it is supposed to be the country's backbone but, in reality, it is one of the weakest spots.

One would, therefore, expect the Railways Minister to stop announcing new projects and ensure, instead, that projects in the pipeline are executed. But that never happens. Political priorities, as always, set the agenda.

FREIGHT OVERLOOKED

Freight accounts for an estimated 65 per cent of the total earnings of the Railways but there is no proposal to hike freight rates in 2011-12, presumably because such hikes will be announced outside the Budget. This often happens, if past experience is any guide.

For example, only a few weeks ago, the classification of food-grains and fertilisers was changed, and an additional surcharge on iron ore slapped to mop up additional revenue. So far in the current year, there have been at least six announcements on freight hike outside budget.

But more important is the volume of freight traffic. In 2010-11, it is estimated that the volume of freight traffic will fall short of the targeted 944 million tonnes (mt) by 20 mt. At the same time, the target for 2011-12 has been set at 993 mt, projecting 7.4 per cent growth.

If the country's economy is projected to grow at 8-9 per cent, the freight transport sector to support such growth should grow at least at 11-12 per cent. In the absence of such growth, the Railways stands to lose further its share of traffic to the road transport sector.

How the targeted 993 mt will be achieved is not clear. In 2010-11, the ban on iron ore exports from Karnataka led to a reduction in the volume of freight traffic handled by the Railways. What is the guarantee that Orissa, the biggest iron ore producing State, too will not take a similar decision in 2011-12?

The State has already stipulated several conditions on rake loading of the ore, causing concern to the area's zonal railway. Next, freight trains get low priority vis-à-vis passenger trains.

The line capacity is not increasing but the number of new passenger trains, including the fast-running Duronto trains, is steadily rising. Which means the “path” available for freight trains will get further squeezed.

This can really be a matter of concern, more so in view of not-so-satisfactory progress of the Dedicated Freight Corridor projects. The interests of a sector which contributes maximum revenue to the Railways are being sacrificed in favour of political expediency. The Railways had originally projected to handle 967 mt or so in 2010-11, subsequently scaled down to 944 mt, which too will not be achieved.

PAMPERED PASSENGERS

With no change in passenger fares, the growth in passenger earnings should correspond to the growth in physical volume of passenger traffic. However, that may not happen, with the Railways Minister announcing a plethora of fare concessions to please a cross-section of people. Also, steps should be taken to plug such leakages as ticket-less travelling. The effort in this regard leaves much to be desired.

In fact, leaving passenger fares untouched year after year is devoid of any prudent business policy. In a market-driven economy, the user charges should be commensurate with the quality of services being offered.

Also, the impact of inflation, the rise in costs, particularly that fuelled by the oil price hike, should be factored in at the time of pricing of services.

An apprehension has been expressed in certain quarters that the Indian Railways (IR) might walk into a debt-trap, unless utmost care is taken in regard to utilisation of funds to be raised by IRFC.

If the funds are deployed in long-gestation projects such as construction of new lines or doubling, then the apprehension might be proved right. This is because debt-servicing will start from day one, while the return on investment will come much later. On other hand, money spent on wagon acquisition might yield a quicker return.

CONTAINER TRAFFIC

With high cost of operation and low revenue earning, Kolkata's Metro Rail has been a constant bugbear to the Railways. One solution could be to hive it off into a separate subsidiary. Prior to the emergence of the Container Corporation of India (Concor), the Railways used to operate seven inland container depots, none doing well.

Subsequently, these ICDs were transferred to Concor and many more were added. Today, Concor is a profit-earning arm of the Railways. The announcement of double-stack trains between Gujarat port and New Delhi surprises those familiar with the development on the container train front.

For about five years now, the container trains have been running between Gujarat ports and Jaipur. The service may be extended from Jaipur to New Delhi. One wonders if such an extension merits announcement in the Budget. Last year, the private container operators were offered Assured Transit Time Scheme but none opted for it.

INTERESTING PROPOSALS

The Rail Budget for 2011-12 also has some interesting proposals. For example, the States guaranteeing trouble-free rail movement will be entitled to two new trains as also two new projects as a special package. This should force States to gear up their law enforcing machinery.

Another such proposal is the Prime Minister's Rail Vikas Yojana, to create a fund to implement socially desirable projects in the Twelfth Plan. The third is the introduction of Go India Smart Card. The proposal for an Integrated Suburban Railway Network too is interesting.

Aren't the politicians attaching undue importance to the Rail Budget proposals as a means of winning elections, one wonders. Nobody realises this better than Mr Lalu Prasad. He should not have suffered the ignominious defeat in Bihar Assembly elections recently if one judged him by the proposals announced for Bihar during his tenure as Railways Minister.

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