Going through the motions

The Railway Budget 2013 is a bit of a damp squib — it is difficult to find something to commend it when pre-budget expectations were so high. While rail transport is the most preferred and economical for both freight and passengers and has the least impact on environment degradation, the Government helps the Railways with mere tokenism.

This Budget reinforces this, since the Plan Expenditure is limited to Rs 63,363 crore with budgetary support of only Rs 26,000 crore.

Compare this to the 12th Plan proposed outlay of Rs 5.19 lakh crore. With 2012-13 Plan expenditure being around Rs 52,000 crore, a Plan expenditure of almost Rs 4 lakh crore will be required in the last three years of the Plan to meet the target projected. This seems impossible.

Execution delays

It looks like the Government has given up on the Railways, maybe because it is not in sync with the times. The Rail Tariff Authority was to be set up in the 11th Plan; it is still under discussion.

The electric and diesel locomotive factories were sanctioned years back; even the tenders have not yet been finalised. The Dedicated Freight Corridor project was to have been completed by now, but work is yet to start. It is perhaps the Railways’ inability to execute these important projects that may have disillusioned the Government.

A similar feeling exists as far as public-private-partnership success is concerned. There has been considerable progress in PPP projects, especially in roads, civil aviation and ports, but the performance of the Railways leaves much to be desired.

The 12th Plan talks of obtaining Rs 1 lakh crore worth of PPP investment, whereas the provision in this Budget is Rs 6,000 crore!

The Railways must introspect and find why PPP projects are succeeding in other infrastructure sectors but not in its own domain. Any chance of achieving the 12th Plan targets seems far-fetched.

Poor financials

The overall financial picture is also depressing. The Budget has shown the normal increase in freight loading and passengers, but increase in resource generation seems to have been almost forgotten.

The same formula of hiking freight rates, which affects all the people in terms of cost increases, is preferred to increasing passenger fares. The benefit to the common man is illusory at best.

The Fuel Adjustment Component (FAC) at least provides a promise of increase in fares, in keeping with cost increases. Internal generation of resources also seems high on intent only.

The Plan expenditure for 2013-14 shows internal resource of only Rs 14,260 crore against Rs 18,050 crore last year. Increased earnings through commercial development of land and stations is another form of tokenism repeated year after year, but not supported by past performance.

The Budget has under-provided for replacement of over-aged assets with a provision of Rs 7,500 crore for DRF. It will result in inadequate replacement and over time, possibly a safety hazard.

It is likely that the Railways will come up with another ‘one time’ demand for funds to replace over-aged assets on the lines of the Special Railway Safety Fund of Rs 17000 crore set up in 2001. The impact on the Railways is there to see: Dirty, shabby stations, low level of service, and outdated infrastructure.

The Budget has nothing to show for technology induction or modernisation, which bodes ill for the organisation in the long run.

Already, the Indian Railways is not on the world map of countries having high-speed trains or high-axle load freight operations. The promise of inducting  Lukwe Holfmann Busch (LHB) coaches as modern inputs seems a bit of an anachronism since the coaches are already more than 20 years old! Adding another 97 express and 27 passenger trains means that the still older ICF coaches of 1950s vintage design will have to be retained.

All talk of safety sounds a bit hollow in this context.

Accounting reforms

The most disappointing aspect of the Budget has been the non-mention of accounting reform stated in the last Budget, which is a prerequisite for improving the Railway finances.

The present accounting system provides almost no managerial inputs for costs of various train operations, without which decision-making is always a shot in the dark. The issue has been hanging fire for almost a decade with no real progress. The setting up of a Rail Tariff Authority, which has been delayed, needs to be revisited to become a Rail Regulatory Authority and not just limited to tariff changes.

In fact, if the Railways wants to increase investment under PPP, the Regulatory Authority would be essential to give private investors confidence that a level-playing field would be provided.

The treatment meted out by the Railways to container operators highlights how private investors face hurdles even after entering into an agreement.

Improved amenities for passengers are always promised but never kept So also this time. Adarsh stations, station cleanliness, bio-toilets, on-board housekeeping are the regular promises made but passengers continue to complain about unclean station premises and toilets on trains.

Escalators and lifts to assist the physically challenged are good inputs, but coach design to assist wheel-chair users is also important. Last year, the Budget indicated that such coaches were being manufactured but there has been no intimation of such coaches in service.

The Budget lists measures for fiscal discipline but follows up with intent to induct 1.52 lakh employees. With staff costs being over 50 per cent of ordinary working expenditure, control over staff strength has taken a backseat. Running another 90-plus additional trains means incurring more losses on passenger operations.

This does not augur well for fiscal discipline. It is interesting to note that the earnings from the passenger sector are projected at Rs 42,210 crore, but loss projected on this account will be around Rs 25,000 crore (2012-13 figures were Rs 24,600 crore)!

The Budget generally comes across as a big disappointment and one rarely finds anything in it that gives the confidence that the Railways will serve the nation’s needs adequately. An opportunity fully lost!

(The author is Director (International Relations) Asian Institute of Transport Development, New Delhi.)

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