The Railway Budget- Bold Steps in the Right Direction

Written by: Pathikrit Payne
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The Railway Budget of Modi Government was always expected to be scrutinized with discerning eyes. If not a litmus test, it was expected to be like a preamble giving a glimpse of the shape of things to come. The first Rail Budget of Modi Government was supposed to be the test to see if Modi walks the talk on bold reforms or whether he too would succumb to the demands of populist measures. Eventually, Sadanand Gowda's first budget as the Railway Minister has proved that the vision of Modi to bring about radical structural reforms and give adieu to mindless myopic populism has already started.

Barring the customary announcement of some additional trains (58 in total) the maiden railway budget by Sadanand Gowda had all the imprints of Modi's decisive actions on bold policy reforms and the green signal to bring policy reforms even in areas which have otherwise been taboo areas for India's election sensitive polity.

The Rail Minister who spoke for the railways and not for any political party

For the first time in several years India has a Railway Minister and a Prime Minister who have the conviction to accept that there are serious issues with the way Indian Railways is managed and run. In spite of its enviable size which runs 12617 trains to carry 23 million passengers and 7421 freight trains to carry 3 million tons of freight every day, in spite of the fact that it remains a monopoly, reality is that Indian Railways is in dire shape today and middles populism has pushed the national asset on the verge of perpetual bankruptcy.

Gowda was bold enough to state, ‘an organization spending an amount equivalent to more than half of its Plan Outlay under budgetary sources on social obligations, can hardly have adequate resources for its development works.' Nothing can be more true than this. Successive governments of India have used the Indian Railways as nothing more than a cash cow to milk populist benefits without giving back the basic fodder the cow needs to sustain itself.

The honest acceptance of the dire situation of Indian Railway

Gowda was honest in his acceptance of the reality of Indian Railways. He stated, ‘We have a total track length of 1.16 lakh kilometers; 63,870 coaches; more than 2.4 lakh wagons and 13.1 lakh employees. This calls for 4 expenditure on fuel, salary and pension, track & coac h maintenance and more importantly on safety works. This takes up most of our earning from the Gross Traffic Receipts. In the year 2013-14, Gross Traffic Receipts were Rs 1,39,558 crore and total Working Expenses were Rs 1,30,321 crore, which works out to an Operating Ratio of almost 94%' and that 'this implies that we spend 94 paise out of every rupee earned, leaving 6 paise only as surplus. This s urplus, apart from being meager, is continuously on decline due to n on-revision of fare. The surplus, after paying obligatory dividend and lease charges, was Rs 11,754 crore in 2007-08 and is estimated to be Rs 602 crore in the current financial year.'

He made it clear that merely even finishing the ongoing projects of the railways would require around 5 lakh crore for the next 10 years at around fifty thousand crore per year. And thus there is no way Indian Railways can garner so much money on its own or depend on governmental grant. The only way forward thus is private participation through private investments.

Further, the railway minister has been honest enough about accepting as to how over the last several years, the focus of successive rail ministers have been more towards sanctioning new projects rather than finishing them. He stated that over the last 30 years 676 projects worth Rs 157,883 crore out of which a mere 317 projects were completed while the remaining 359 projects remain incomplete and the finishing of them alone would need an additional Rs 182000 crore.

The bold steps for better infrastructure

The decision to create a diamond quadrilateral route to connect the key metro cities much on the lines of the Golden Quadrilateral of the National Highways Development Program is a bold step forward. Much on the lines of NHDP which used the Build Own Operate Transfer (BOOT) and the Build Own Lease Transfer (BOLT) concepts to use private investments for development of world class national highways, there are similar potential avenues for the railways to judiciously use private investments in the railways itself.

This apart, the proclamation to initiate Bullet trains, initially in the Mumbai-Ahmedabad route and the decision to raise the speed of trains to the range of 160km-200km in 9 sectors are also welcome steps. While the naysayers and cynics would keep frowning, it was time that India woke up to the reality of where China has taken its railways and how it has incredibly helped China in leapfrogging its economy vis-à-vis the Jurassic age vintage rail that India seems content with. Modi has been right in stating that Railways cannot just be used for ferrying passengers but need to be used as a medium for national economic development.

From that perspective India needs massive investments in laying down new tracks. Track addition has been a real lacuna in India since it does not garner votes as the announcing new trains have been more beneficial for political bosses. Unless India invests in laying more tracks, it would be difficult to take Indian Railways to the next level. The decision for engaging private investments is expected to be for laying newer tracks.

Finally, cleanliness is a priority

This apart, Modi's penchant for cleanliness is something that would hopefully make the rail babus wake up from their slumber and make the railway stations and trains a little more clean than the dustbin most have been reduced to. Reality is that the least said about the condition of restrooms of railway stations, hygiene of platforms and condition of lavatories in the trains the better. Most railway stations have a assortment of beggars, dogs, rodents, hawkers, pickpockets and pimps going around with their usual business as if the last one having the right on the platforms is the hapless passenger. Defecation on railway tracks of stations and the filth the tracks are filled with reflect the sorry state of affairs of Indian Railways.

The decision to raise the outlay for cleanliness by 40% is a welcome step in the right direction. If the railway staff is incapable in keeping the stations clean, it would be better to outsource it to those professional agencies who are capable of doing it in the best manner. The decision thus to outsource housekeeping in 50 stations is also a welcome step.

Beyond fares....the basic amenities that every passenger would want

Likewise, the decision to have police escorts for the ladies compartments, to have boundary walls around railway stations as also the proposals to have automatic doors for all mainline and sub-urban coaches, making RO water available in the trains are all extremely welcome steps. Additionally the bold decision to have a fuel adjustment linked component to price revision and to have periodic review of railway fare is a bold move which only Modi's Government with a decisive mandate could have taken.

Significant steps....but a long way to go before railways is transformed

After a long time, it seems that there has been a rail budget which truly is laying down the foundation of a long term goal of having a radical metamorphosis of the railways. Or else, most previous budgets have been all about making populist statements, announcing a horde of new trains for states, especially the one from which the railway minister belong to as well as playing the messiah role by not announcing price hike, financial condition of railways be damned.

While the overall policy direction seems good, it would be even better if Indian Railways is corporatized on the lines of BSNL or ONGC both of which were initially departmental organizations. A corporate structure would bring in more transparency in the rail accounting system and would allow induction of independent directions to have better oversight of Indian Railways.

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