Railway finances

THE RESOURCE CRUNCH facing the Indian Railways seems to be a result of politicking with its finances. Despite a conscious attempt by the former Railway Minister, Mr. Nitish Kumar, to raise a national debate on this key issue, nothing much has come out of it. All indications now point to an unpalatable Railway budget next month, or a compounding of the financial crisis for the system. This is because the politicians at the helm of the Ministry have failed to take the right decisions and persisted with a populist course. Without augmenting the finances, successive Railway Ministers have dug deep into the reserves and nearly wiped them out. Though an increase in passenger and freight tariffs at least in alternate years has now become a routine, this has only sufficed to account for inflation and to partially meet the rising cost of inputs. Sometimes, the revision in rates is so illogical that it deprives the Indian Railways of the revenues that should normally flow in. Unreasonable tampering with the freight rates has taken away a good share of the Railways' goods traffic. As the system continues to subsidise the movement of essential commodities and the maintenance of uneconomic lines or routes, any decline in freight revenue hurts the finances even more.

Ms. Mamata Banerjee has been eyeing the Railway Ministry for a year now and had to wait for the general election this year to get this portfolio. She then had the opportunity to come to terms with reality, when she presented supplementary demands in Parliament. There was already a hike in diesel price and the Orissa cyclone, which cost Rs. 900 crores. The road transport sector managed to pass on the burden to the consumers, but Ms. Banerjee, playing to the gallery, insisted on the Railways absorbing the additional costs. And now, she and her Minister of State, Mr. Bangaru Laxman, are singing the same tune - that something has to be done about Railway finances. They would obviously prefer an enhanced budgetary support from the Centre to the Railway Ministry, as the percentage of Central contribution to the Railways had dipped steeply through successive plan periods. The Khanna committee on safety has recommended a series of steps to improve railway safety and clear the arrears in track renewal and doubling. The Ministry wants to give a push to conversion of unmanned level crossing into regular crossings with lifting barriers. To implement this whole package of safety measures, the Railways will need something like Rs. 15,000 crores.

It is in this context that the Railway Minister must weigh her options carefully, before giving away to her constituents. For instance, in her supplementary estimates, Ms. Banerjee has offered special concessions to the unorganised sector for traders, farmers and vendors earning less than Rs. 400 a month. How does any Railway official estimate the income of these categories, who are the main users of the highly- subsidised suburban services? When there is a clear case for a phased increase in suburban fares to make them break even in terms of cost, providing more concessions cannot be justified. If the Ministers now handling the Railways really want to nurse its finances back to health, they must announce a freeze on new projects and recruitment, no more feasibility studies till the backlog is cleared, no introduction of new trains and a panel to streamline existing services so that there are no unnecessary services in sectors where the occupancy remains below 40 per cent (unless there are no other means of transport there). An independent authority must be set up to prescribe and periodically revise the tariffs so that the Railways can gradually win back its legitimate share of passenger and goods traffic and also increase its revenues. The Railways can do with one Minister and less political interference.

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