Predictably, the Rail Budget 2012-13 has made a visionary statement when ground realities demand a more focused approach to bail the system out of its present fiscal mess. No doubt, the Union Railway Minister, Mr Dinesh Trivedi, did some course correction by hiking the freight rates of several commodities on March 6, including coal, foodgrain and fertilisers, which will work out to Rs 18,000 crore in a full year prior to the budget.

In a pragmatic manner, he also increased passenger fares on Wednesday's budget that is likely to mop up Rs 6,000-7000 crore in a full year as said by the Railway Board Chairman, Mr Vinay Mittal, in his post-budget interaction with the media.

Since freight traffic is a mainstay of the system, there has been a shortfall of 23 million tonnes in the current fiscal original target with the railway hoping to end the year with 970 million tonnes.

Against this, the next fiscal freight target of 1,025 million tonnes appears on the high side, given the uncertain outlook of the economy and the still unclear picture about mining operations. Iron ore freight movement alone falls short by more than Rs 1,000 crore in the current fiscal.

Again, hike in passenger fares by Rs 3 and Rs 5 for 100 km in second class and sleeper class travel in express trains would definitely hurt aam aadmi who take the train to work in industrial towns such as Tirupur or Moradabad from contiguous areas. Together with hike in commodities' traffic and passenger revision fares, the inflationary impact is substantial for the working class in general and small town residents in particular.

As wages and fuel costs remain fixed at humongous proportions year after year, the system is left with hardly any fund to finance rolling stocks maintenance or creating new assets to render it operationally viable and sustainable. Thus, appropriation to capital fund which was budgeted at Rs 2858.41 crore now stands revised at Rs 942.15 crore for 2011-12, while for the next fiscal it is being pegged at a massive Rs 5,000 crore. Similarly appropriation to Development Fund, which was budgeted at Rs 2,400 crore, now stands revised at Rs 550 crore for 2011-12. But this is being budgeted at a whopping Rs 10,557 crore for the next fiscal, the inaugural year of the 12th Five Year Plan. It is also interesting to note that when the operating ratio was budgeted at 91.1 per cent in the current fiscal, it skidded to 95 per cent (revised).

But the system expects this to improve to 84.9 per cent in the next fiscal. Again as safety is the mantra by which the Minister has repeatedly sworn, the allocation for signalling and telecommunication, which was budgeted at Rs 1,101.88 crore for the current fiscal, stood revised to Rs 794.09 crore. No wonder, he has to allocate Rs 830 crore only on realistic grounds for the next fiscal. How much even this gets pared down at the end of next fiscal is anybody's guess!

Medium-term plans

When the need of the hour is to explore every avenue for augmenting revenue and to contain unproductive and wasteful consumption expenditure, the Railway Minister gave only a medium-term plan to scale new highs in performance. To back up his wishful thinking, he has announced with fanfare the setting up of Indian Railway Station Development Corporation, Logistics Corporation, making attractive private investment schemes for wagon leasing, sidings, private freight terminals, container train operations, rail connectivity projects and a new Board Member to bolster the railway's perpetual crush with PPP (public-private partnerships). While most of these had been bandied about for several years past with no dearth of expert reports on each one, the proposal to appoint a Member Marketing shows that it took nearly six decades for the Indian Railways to do this even though successive rail budgets had been talking about part-privatisation since the liberalisation era of the early 1990s.

Proposals such as setting up of Railway Tariff Regulatory Authority are long overdue so that the system gets insulated against populism, which has been its bane with rail ministers using the Indian Railways as a gravy train to announce new lines, new extensions and new stoppages under duress from elected representatives across the nation.

As railways' diesel and electric power cost is soaring, the move to undertake fuel adjustment component in fares would reflect the scarcity value of these vital inputs so that efficiency gains could be realised, albeit at upward cost to users, industry and individuals in the days ahead.

If Mr Dinesh Trivedi's focus on safety, consolidation, decongestion and capacity augmentation, modernisation and improving the operating ratio from 95 per cent today to 74 per cent in 2016-17 is to be realised, the rail budget 2012-13 is only a timid bid with no concrete plan of action to realise the untapped potentials of the systems, analysts contend.

Published on March 14, 2012