The Rail Budget presented in Parliament on Tuesday is refreshingly salutary in refraining from populism or imposing savage imposts for past neglect on proper business propositions by focussing solely on fiscal discipline.

It has rightly kept in view the future challenges for the major mode of transport by resorting to a pragmatic book-keeping exercise.

It is small wonder that the suave Railway Minister Pawan Kumar Bansal said at the outset that the “Indian Railways remains financially sustainable so that resources generated can be ploughed back for efficient upkeep, operation and maintenance of the system itself for the benefit of the rail users”, even while conceding that “growth of this crucial transport has not always conformed to these principles”.

With the Planning Commission having tentatively pegged the Railways’ 12th Plan size at Rs 5.19 lakh crore with a gross budgetary support of R 1.94 lakh crore, internal resources of Rs 1.05 lakh crore and market borrowing of Rs 1.20 lakh crore, with another Rs 1 lakh crore expected to be raised through public- private partnership route, the tasks ahead are really stupendous.

That the Railways has put huge faith in PPP route against ‘limited success’ so far and have now zeroed in on a slew of projects such as elevated rail corridor in Mumbai, parts of the dedicated freight corridor, redevelopment of stations, power generation/energy saving projects, freight terminals show that commercial considerations seem to be swaying the Railways more now than in the past.

The only issue is how the mandarins in the Rail Bhavan are going to provide attractive policy ballast to prospective private partners. A major millstone is the absence of neutral umpire to oversee PPP projects so that onsite disputes or sticking points are resolved without undue harassment to the private investors.

A related issue is the need for setting up of an independent Rail Tariff Authority which had been flagged off in the last Budget. Though Bansal said a proposal in this regard was formulated and is at inter-ministerial consultation stage, there is an urgent need to establish such an authority particularly when the system had to move with dynamic pricing pattern to reflect the burgeoning cost of inputs so that all rail users do not grumble in return for a decent standard of service.

Freight impact

As the freight traffic remains the lifeline of the system, the proposed rationalisation on the basic freight rates of major commodities, though in the range of 5.8 to 6 per cent, is bound to have a cascading effect on overall prices of commodities affecting the common man.

But given the escalating cost of major fuels such as high speed diesel oil and electricity which exacts substantial percentage in freight operations, it is time that the Railways explored other non-tariff business such as the vast Railway lands vested with them for commercial exploitation in innovative ways.

This Budget has taken some incipient moves by setting a target of Rs 1,000 crore each for Rail Land Development Authority and IR Station Development Corporation in 2013-14, after so many years of inaction on this front.

Yet another laudable feature of this Rail budget is that 347 ongoing projects had been identified as priority projects and provided committed funding, as against the hitherto unhealthy practice of the thin spread of sparse resources on a plethora of projects mostly as gravy train to the members of Parliament.

It is heartening that the Rail Minister said that he would ensure funding of these projects at required level during the 12th Plan so as to complete them in a time bound manner for early harvest.

Considering how the Railways had given place to road transport over the years from their commanding share in the movement of goods and services across the country, it is worth the while that a sensible budget aimed at long-term benefits to the system has been presented.

Though this is likely to hit rail users, particularly the freight business, there would be long-term gain for the short-term pain if the industry bears the burden to retrieve the glory of the safest and cheapest mode of transport for the benefit of all stakeholders, policy analysts said.

>srinivasan.gopalan@thehindu.co.in

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