If one expected some path breaking announcements from the new government’s first railway budget, one would be in for disappointment. It was presented using much the same template as the previous budgets, with little or no suggestions on how to overcome the dire financial distress the railways are in. The minister described his budget as a course correction. Fortunately, the noise and din arising from revision in fare and freight charges—announced strategically ahead of the Parliament session—had more or less died down by now, allowing the railway minister some respite from slogan shouting on this count when the budget was formally presented in the House.
The minister said that with the revised rates of passenger and freight traffic, it is estimated to garner an additional Rs 8,000 crore annually. He also added that in future the tariff would be linked to the prevailing fuel charges. In the coming year the revenue surplus is estimated to be higher than that of the preceding year, improving the operating ratio by about 2 per cent though the accounting details of how this figure has been arrived at were not available.
Taking a cue from the pronouncements made by the prime minister several times in the past, the railway budget has proposed the introduction of a bullet train between Ahmedabad and Mumbai and increasing the speed of trains on selected sectors to 160km-200km per hour. It also proposes a Diamond Quadrilateral of high-speed trains between major metros which are the commercial hubs in the country. A modernisation programme costing Rs 50 lakh crore over the next 10 years—that was earlier suggested by a special committee on modernisation—is also visualised. One should also not forget the funds required for the ambitious Dedicated Freight Corridor, a project which seems to be moving at a snail’s pace for last several years with its huge overrun of costs. The budget offers no explanations about how the capital costs of these major projects would be met.
The internal generation of funds is likely to be of the order of nearly Rs 600 crore and market borrowings have been scaled down to Rs 11,000 crore. The railways are, therefore, banking on a much larger budgetary support of Rs 47,654 crore, which appears to be unrealistic, knowing that till last year the central government itself was cash-strapped, unable to meet the full funding requirements of the transporter. The other sources of additional funding as listed out in the budget are: investible surplus of Railway PSUs, private investment, both domestic and FDI, and Public Private Partnership (PPP). A greater role of the PPP model has been envisaged, especially for capital-intensive schemes such as the port and coal connectivity projects. It was said that speedier completion of connectivity lines to coal producing areas could bring in 100 million tonnes of incremental coal traffic to the railways
Unfortunately, the quantum of funds and the manner in which the funds are to be raised from each of these sources has not been spelt out anywhere in the budget papers. As a matter of fact these are, at the moment, not very assured sources. Take, for instance, FDI in railways on which, for some time past, there has been a serious discussion on introducing it in the railways. Reportedly, a note on the subject was also sent to the cabinet sometime ago but its fate is not known. PPP, too, has virtually been a non-starter so far, simply because a level playing field has never been allowed to private players, all procedures being heavily loaded in favour of the railways. One would have expected the minister to come out with some concrete assurances to private investors for luring them into this partnership.
The budget nevertheless includes some welcome features. Firstly, there is a lot of emphasis on passenger amenities, meant to assuage the hurt felt by the travelling public by the steep hike in fares. A 40 per cent increase in budget allocation on cleanliness and sanitation (harking back to Modi’s take on this subject at Varanasi) at stations has been made: outsourcing this work to private parties at selected major stations and installing CCTVs to monitor the cleanliness activities. An important step will be the arrangement for direct discharge of human waste for cleaner environment at stations. It is also proposed to provide more foot overbridges, escalators and battery-operated cars for differently-abled citizens at major stations. Catering services will be honed up also to ensure supply of hygienic and quality food to passengers.
The railways’ safety record in the recent past has been less than satisfactory. Security of travellers, especially women, has also received a lot of flak. A higher budgetary allocation on safety and security was, hence, necessary and the budget has not disappointed on these counts. The railways propose to recruit 17,000 security personnel in the Railway Protection Force, including a large number of female constables with a view to provide greater safety to women travellers. Manning of a large number of unmanned level crossings is also proposed to be taken up on priority. The budget proposals also incorporate the prime minister’s philosophy of improving work culture in government offices. The railway budget, therefore, envisages a paperless office in five years, Wifi services at all major stations and mobile-based services for passengers. It is also mentioned that railway land records will be digitised to facilitate disposal of surplus land for commercial use and earning additional revenues for the railways. This should usher in greater efficiency and economy in expenditure.
There was only a passing mention of restructuring of the Railway Board, without elaborating the subject further. There was great expectation that the minister would make a more definitive statement on the subject, as this is the need of the hour and the only way out to infuse greater administrative and operating efficiency in the organisation. This was a major disappointment, but one wishes the matter is not allowed to rest here but pursued to its logical conclusion for the emergence of a better organisational set-up.
From a winter of despair let the Indian Railways look forward to the spring of hope and for better times to come.
The author is a former MD of Railway Finance Corporation.