Rising expenditure, high-cost borrowings burden for Railways

G. Srinivasan New Delhi | Updated on March 04, 2011


In keeping with the forecast made by many analysts in the run-up to the Rail Budget that Ms Mamata Banerjee would not burden either the travelling public or user industries with any impost, the 2011-12 Rail Budget lived up to it, even as the system is faced with escalating expenditure and is getting increasingly sunk into the vortex of high-cost debt to finance populist programmes and policies.

Being a politician with an agenda to make a mark in her home State which is facing a crucial Assembly Election, Ms Banejree was on a spending spree and on announcing a spate of new trains and other cosmetic attractions to ensure that the pay-back time from the beneficiaries would not be before long.

A cursory glance at the explanatory memorandum shows that the railways get 65 paise from goods traffic earnings, 26 paise from passenger earnings with the balance being made up by other coach earnings, sundry other earnings and miscellaneous receipts each at three paise for every one rupee the system earns.

Depreciation Reserve Fund

If the railways get by and large 81 paise out of each rupee they earn from freight and passengers, leave aside fuel and lease charges which gobble 20 paise, a major portion of 59 paise goes to staff wage and allowance and pension fund.

In other words, the Depreciation Reserve Fund (DRF) which keeps the rolling stock going gets only two paise.

How can an arterial mode of transport that is touted to be an emerging competitor to roadways and other mode of transport survive without spending much on running the system smoothly and expanding it to provide benefits to legions of users?

That the railways does not pay proportionate attention to maintenance of rolling stocks on which the system's fortune is built is revealed by the fact that against the budgeted allocation of Rs 4,950 crore for the current fiscal, the revised figure turns out to be Rs 5,024 crore. But, the actuals in 2009-10 were Rs 5,064 crore.

Against this, the allocation for the next fiscal at Rs 5,221 crore does not show any salutary step-up in terms of upkeep expenditure to make the system efficient and error-free in its operations.

The same is the dismal record in track renewals where the budgeted for the current fiscal at Rs 408 crore would not be available as the revised figures reveal it at Rs 329.50 crore. For the next fiscal this is being pegged at Rs 330 crore, testifying to the callous disregard the railways attach to track renewals, considering the fact that the rail networks run at 63,974 route km and the system carries 20 million passengers and 2.44 million tonne of freight each day during 2009-10, as per the latest yearbook released today.

For all the lavishing love the railways hold for passengers, the allocation for passenger amenities strikes odd for the next fiscal as the railways intend to invest only Rs 19 crore, after investing a massive Rs 511 crore on them in the current fiscal.

Passenger amenities

On the other hand, amenities for the legions of railway staff numbering more than two million, the expenditure (revised) for the current fiscal was Rs 997.56 crore and Rs 1,100 crore for the next fiscal, excluding staff quarters spending amounting to Rs 295 crore this fiscal and Rs 300.50 crore.

At the end of the day, Ms Banerjee has looked after her staff reasonably well but gave a short shrift to users, both ordinary and industry, and damaged the long-term interests of the system by resorting to massive high-cost borrowings of a staggering Rs 20,594 crore.

It is time that the well-meaning suggestions to make Indian Railways a truly commercial establishment serving the beneficiaries efficiently and not patronising a few of them were implemented in right earnest before the system collapses on the heavy weight of pulls and pressures exercised by politicians with short-term interests.


Published on February 25, 2011

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