Little to cheer in Rail Budget
The only way one can describe the Railway Budget for 2013-14 is that it has turned out to be a non-event. It is a budget that lacks a long term vision and has failed to chart any new paths for the sustained future growth of the organisation. Financially crippled and politically strangled, the Railways have given the public little to cheer about. The past few years have seen this premier public undertaking touch a new low in financial and operational performance. There was but a brief moment of sunshine a few years ago when the Railways earned a reasonable profit mainly owing to an enhancement of the axle load that led to increased wagon loadings. No such major initiative has been witnessed since then. Consequently, the dark clouds continue to hover above, shutting out the sunlight and bringing in a climate of gloom and despair. There were high expectations from this year’s budget, but it has turned out to be a major disappointment, notwithstanding the hand clapping it received from the Finance Minister.
From a national perspective, the Railways must provide a long term plan which would ensure not only adequate transportation capacity but also modernisation of network, improvement in asset utilisation and productivity, as well as modernisation of rolling stock and maintenance practices. While the budget papers make a mention of the Dedicated Freight Corridors as part of capacity augmentation process, the pace of work on this project has been rather slow. Delays in execution have already escalated its cost to nearly Rs 77,000 crore from the originally estimated Rs 28,000 crore. No explanation has been offered for this escalation nor the plans to ensure completion of this work by the target year 2017. The sourcing of additional funds needed to complete the project has also not been indicated.
A mention has been made in the budget that Indian Railways has joined a select club of railways which run freight trains of more than 10,000 tonnes load. This may be a laudable objective, but the time and expense required to convert it into practical shape is going to be enormous. Heavy haul running calls for substantial initial investments for upgrading tracks, rolling stock and maintenance facilities, and knowing the fragile state of railway finances coupled with the unwillingness so far demonstrated by the central government in providing it with adequate quantum of budgetary support, it appears rather premature to make any such definitive declaration today.
It has been proposed to mobilise Rs 6, 000 crore through the PPP route during fiscal year 2013-14. However, the past experience tells us that the Railways have failed to provide the right climate for private players to participate in such ventures. The complex procedures and legal framework within which the Public- Private Partnership projects are required to operate in Railways do not provide the desired incentive to the private sector, as the latter feel that there is no level playing field for them and all procedures are heavily loaded in favour of the Railways. No wonder, PPP has formed only a miniscule portion of the Extra Budgetary Resources during the Eleventh Plan period. Railways must have a rethink on how it should go about implementing PPP projects if it is keen on meeting the target.
Railways has failed to meet any of the budget targets for the year, both physical and financial. The freight and passenger traffic projections have been scaled down. The net revenue is now estimated to get reduced by Rs 6, 484 crore. Since appropriation to Pension Fund has been increased by Rs 1,800 crore, the rest of the reduction in revenue has resulted in a scaled down appropriation to the Depreciation Reserve Fund (DRF). This would imply that timely replacements and renewals of assets will suffer. The allocation under DRF for 2013-14 has also been reduced to Rs 7, 500 crore from Rs 9, 500 crore provided in the Budget estimates of 2012-13. It is of little comfort to be informed by the minister that Indian Railways have entered the one billion tonne select club, when the growth of freight traffic during the year has barely touched 5 per cent and the target of 1047 MT of revenue earning traffic for 2013-14 indicates a growth rate of less than 4 per cent only.
The public has a right to be upset by the surreptitious manner in which the Railway Minister has imposed additional financial burden on rail travelers. His claim that passenger fares are not been revised in the budget seems to be a case of pulling wool over the eyes of the unsuspecting passengers who will now be forced to dish out extra amounts towards reservation charges, levy for super fast trains, Tatkal booking and cancellations. Together, these charges would form a substantial percentage of train fare and would hit hard the so-called ‘Aam Aadmi’ or a person of average means, especially if he is to travels with family.
If at all necessary, the proposed revised charges should be confined only to the First AC traveler, who may yet have the capacity to pay. Passenger fares were revised in January this year, and the main justification provided for this revision is that it will enable the Railways to provide better amenities to the passengers. It will be desirable to create a separate Amenities Fund to which the extra fares collected should be appropriated, and all special passenger amenities works that the ministry has in mind should be financed through this Fund. This will bring greater transparency to the utilisation of funds and will reassure the public that if they are paying more for their travel, they are also being provided with better facilities that are clearly identifiable. Bowing down to political pressures, the Railway Minister, much like his predecessors, has announced introduction of several new trains. As many as 67 express trains and 26 passenger trains will be introduced this fiscal year. Funds could have been conserved to ensure completion of new routes announced in previous budgets. This also belies his affirmations that this budget is not influenced by the imperatives of the general elections due next year.
Christine Weatherly’s poem quoted in the budget speech carries the line that reads “I think I can, I think I can”. We are left wondering if the Hon’ble Minister really can.
S N Mathur is former MD, Indian Railways Finance Corporation.
E-mail: mathur.surendra@gmail.com