Reforms That Will Put Railways Back on Track

Published: 09th July 2014 06:00 AM  |   Last Updated: 08th July 2014 11:34 PM   |  A+A-

The Modi government’s first Railway budget, which was pre-empted by fare and freight hikes last month, has three big messages to offer: consolidation, limited populism and expansion largely with private investment.  Railway minister Sadananda Gowda has simultaneously undertaken a holding operation to stop the drift of the last 10 years and spelt out a big-vision road map for the Railways that will need policy changes to materialise. While limiting announcement of new trains and projects his focus is rightly on completing the existing ones, improving the operating efficiencies of the railways to generate more internal resources.

It is a responsible budget without too many populist flashes and carefully balances the need for profit with the organisation’s social welfare role. It emphasises the need to raise passenger and freight rates periodically depending on fuel prices but also contains a slew of passenger-friendly announcements, promising cleaner, safer trains and stations and better food to take the sting out of it. The focus on one bullet train initially, and upgrade of existing infrastructure for higher speeds on other sectors, is a good balance between affordability and desire.

The key policy changes envisaged as part of the railways’ course correction include the proposal to allow foreign direct investment in rail projects and expansion of public-private partnerships to new areas. The proposed bullet train between Mumbai and Ahmedabad will need new tracks and cannot be implemented without foreign participation. The diamond quadrilateral will need track upgrade to raise train speeds to 160km-200 kmph and this, too, will call for massive foreign and private investment. To attract such massive investment it is imperative that the existing work culture of Indian railways is radically changed. This calls for restructuring of the present Railway Board, an area that Gowda’s speech merely mentions without spelling out details. The Modi government will be tested on implementation of its promises on high-speed and bullet trains and actual participation of the private sector. If it can deliver, the budget could mark the beginning of long-delayed railway reforms.

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