Economy

Which track will Prabhu take today?

Mamuni Das New Delhi | Updated on January 20, 2018 Published on February 24, 2016

Ready: Suresh Prabhu gives finishing touches to the Railway Budget withMinister of State Manoj Sinha, in the Capital, on Wednesday. RAMESH SHARMA

Rising wage costs and dismal cargo growth remain the biggest challenges

In the Railways hierarchy, the pointsman doesn’t rank very high, but his is a critical job as he switches trains from one track to another to keep the locomotive running smoothly. Tomorrow, when Railway Minister Suresh Prabhu presents his second Budget, he will have to take a leaf out of the pointsman’s book as a variety of challenges confront him — a lacklustre economy, freight moving to roads and shipping, and bloating human resource costs.

One of the more successful Ministers of the Modi Cabinet, Prabhu faces the unenviable dilemma of whether or not to raise fares and freight rates, with revenues dipping and demands rising for a variety of ambitious projects such as the Bullet Train. But with elections to four States ahead and fuel price falling, will the political leadership green-flag such a move?

For the ten months of this fiscal year, till January, the net tonne kilometre or actual cargo carried is down 3 per cent over the previous period.

According to official sources, at a recent interaction with the industry to get projections on cargo for the next fiscal year, the Ministry did not get particularly optimistic indications — hardly 25 million tonnes of incremental cargo over this year’s numbers.

The response was subdued from the key bulk movers — cement, fertiliser and foodgrains.

In January, a senior Railway Board official had told BusinessLine on condition of anonymity that the organisation expects to close the year with 1,108 million tonnes of cargo. While this is more than the 1,098 mt cargo moved in 2014-15, it is lower than the budgeted target of 1,190 mt. A far cry from Railway officials’ claims that the system has the potential to move 1,200 million tonnes a year.

Reforms initiated

While this is the key challenge, Prabhu has green-signalled many changes, including an accounting reform, implementing IT processes for award of civil work projects, and setting up of joint ventures with State governments, which should bear fruit in the coming years. Indeed, according to the Railway Ministry’s action taken report on 140 promises made in the previous Budget, about 40 have been redeemed, with the rest at various stages of implementation.

The Minister, who has also tied up funding for railway projects with LIC, the World Bank and Japan, faces the challenge of improving the implementation capacity of not just the Railways but also its many contractors, point out officials. Unless project implementation skills are improved, the loan payback may become a pain point.

Prabhu has also moved quietly to price certain services more on some sections.

For instance, the Mahamana Express between Delhi and Varanasi charges 15 per cent more for AC travel. By increasing cancellation and Tatkal charges, Prabhu has also augmented revenues from the passenger side.

Phone-based ticketing, which has started in the suburban segment, is expected to lower the cost of issuing a suburban ticket. There’s e-catering, which, when it catches up, will lower the catering subsidy. E-bedroll is another area that could also provide the Railways with branding options.

Branding

Similarly, the Railways has firm plans to monetise its assets by branding, which may be more successful now given its focus on improving processes. Station redevelopment, completion of work on busy stretches, and redeveloping railway housing complexes with private investments are some of the other expected initiatives.

To tide over the difficult interim situation, the Railways needs support from the Finance Ministry in various forms, such as a dividend waiver, more budgetary support, lower taxes on diesel, and sharing of staff and pension costs.

Prabhu has termed as ‘unbearable’ the impending burden of the Seventh Pay Commission report.

Published on February 24, 2016
null
This article is closed for comments.
Please Email the Editor