Events & Issues

New Delhi, 28 February 2011

Railway Budget

OPPORTUNITY LOST

By Col. (Dr.) P. K. Vasudeva (Retd)

The Union Railway Minister Mamata Banerjee’s third Railway Budget can be attributed to the aam aadmi, but for others it is a lack-lustre Budget. For the middle-class the absence of any passenger fare hikes for the third successive year will come as relief and boost the Railway Minister's rating to the discomfiture of her political opponents.

For the rural, back-of-beyond aam janata, with poor access to railways, the addition of a number of new lines and employment opportunities through rail-based factories will be welcome. So also for those living in low-employment and politically-sensitive Jammu and Kashmir or the North-East States, where Mamata proposes a rail line to Imphal.

The senior citizens are mighty happy as Bengal’s stormy petrel vowed to build a stronger railroad infrastructure based on the Vision 2020 document while announcing a slew of concessions, including reducing the eligibility age of senior women citizens from 60 to 58 years and raising the fare concession for senior citizens (above 60) from 30 to 40 per cent.

The other measures include a cadre restructuring for better promotional prospects for the staff, setting up of a sports cadre, manning of all unmanned level crossings by 2012 and recruitment of 16,000 ex-servicemen. But the scheme for setting up 10,000 shelters for poor people living near the rail tracks, in collaboration with the Urban Development Ministry, has implications for the Railways' land policy, and has to be approached cautiously.

Importantly, with an eye on the coming Assembly polls in West Bengal, Mamata came out with a number of projects for the State, including a metro coach factory in Singur and 30 new trains. Predictably, this has been widely criticised by other States like Punjab, Himachal Pradesh, Madhya Pradesh, Gujarat, Bihar and Chandigarh (UT).

Apart from new trains, the 2011-12 Budget has sought to extend the services of 33 trains, increase frequencies of 17 others, conduct 107 line surveys to identify new routes, start double-decker trains on Jaipur-Delhi and Ahmedabad-Mumbai routes and introduce super AC class.

The Budget also sought to extend the concession to physically challenged people to all Rajdhani and Shatabdi trains, besides extending facility of card passes to parents of unmarried posthumous Paramvir Chakra and Ashok Chakra gallantry award winners and make 50 per cent concession for media persons and families twice a year.

Significantly however, beneath the rhetoric about the role of the Railways and the concern for a “rail revolution”, Mamata laid out a Budget with a thrust. As against just 10,677 km of new lines since Independence, she admits that the Railways fell short of target by 300 km of 1000 km announced last year. Happily, the targets for gauge conversion, doubling and electrification --- all ramped up last year --- have been met.

Undoubtedly, set against this sort of commitment, the Railway Minister's ambitious plans are eminently do-able. Despite its vast network, parts of India are still uncovered and, while they may elicit some scepticism, Mamata plans to link all the North-Eastern States in seven years with a carefully, if clumsily worded, “non-lapsable fund” should be lauded.

To this end she has gone out on a limb pitching the new fiscal's annual plan at Rs 57,630 crore, the highest ever in a single year. Mamata expects the Finance Minister to hand her nearly a third. But interestingly, another Rs 20,000 crore is to come from market borrowings.

The Indian Railway Finance Corporation, in addition to the Rs 9,000 crore it raises for leasing rolling stock, will now issue tax-free bonds for Rs 10,000 crore for “select enhancement work”. Herein lies a challenge: For a Government concerned about its fiscal deficit, bonds of this type defeat the purpose, unless the Railways show better results in the coming years. Which is not likely, considering the present trend.

There has been general concern about the adverse operating ratio in the last two years as also the depletion of the fund balances. The operating ratio, which was 96 per cent in 2001-02, came down to 75.9 per cent in 2007-08. Thereafter, it went up to 90.5 per cent in 2008-09 and the Revised Estimates for 2009-10 projected the same at 94.7 per cent.

For the current fiscal, the projected figure is 92.1 per cent, which is expected to fall to 91.1 per cent in the year 2011-12. The impact of the post-budgetary factors of Rs 5,700 crore, coupled with a reduced loading target of 924 million tonnes, have had their effect on the Railways' performance for the current year. While the Railway Budget recognises the difficult situation in which the organisation is placed, it hopes that revival will take place.

Needless to say while the setting up of the Special Railway Safety Fund provided the necessary fillip to augment capacity so that there were no bottlenecks in carrying the buoyant incremental growth in traffic. However, the results of all these measures are too well known to need elaboration!

The Railways' vision of segregating the suburban corridor, combined with the present announcement of an integrated suburban rail network for Mumbai, Chennai and Hyderabad, should enable reasonably satisfactory service for commuters in these metros.

In a market-driven economy, where user charges are expected to be commensurate with the quality of service, the Railways would not be faulted if such an attempt had been made in the current Budget. This point gets added emphasis since the commuters are mainly factory and office goers and do not require any subsidisation. A scheme similar to the Izzat scheme, which benefited 4 lakh commuters, could have taken care of the concerns relating to the aam aadmi, or daily wage earners.

Typically, while the Budget mentions austerity measures and the likely savings on this account, it is loaded with a number of announcements, which are likely to increase the money spent on the rail staff.

True, the Annual Plan size of Rs 57,634 crore for 2011-12 was an urgent necessity, being the final year of the Eleventh Plan. Especially against the backdrop of the Railways having spent only Rs 1.43 lakh crore in the Eleventh Plan, against a projected outlay of Rs 2.51 lakh crore.

Thus, even with this stepped-up outlay, the Railways might fall short. That too a shortfall that is spread across all three sources, internal resources, extra budgetary resources (borrowing and PPPs) and gross budget support. Succinctly, in a nutshell, the Railway Budget has skirted a number of issues so vital for restoring the financial health of the organisation. ----- INFA

 (Copyright, India News and Feature Alliance)