A.V. Poulose

The Rail Budget, presented by Mr Laloo Prasad Yadav, has not really given a thrust to the ailing Railways. The paradigms within which the Railways must work should have been spelt out in a National Policy that would ensure greater commercial orientation, without having to part with the ownership of assets or management. The Railway Minister's reluctance to do so is intriguing, says A. V. Poulose.

THE maiden Budget of the Railway Minister, Mr Laloo Prasad Yadav, in the United Progressive Alliance (UPA) Government, which was expected to give a policy thrust to the ailing Railway system, has been disappointing.

Expectation all round was that this would be a populist Budget; there have been a few measures such as free travel for unemployed youth going for interviews, inclusion of the spouse of licensed porters in the pass facility allowed to them, 75 per cent concession in second- and sleeper-classes to widows of Defence personnel killed by terrorists, 50 per cent concession to escorts of deaf and dumb persons in first, second, and sleeper classes and in season tickets and 75 per cent concession in second, sleeper, and AC chair-car and AC three-tier classes for haemophilia patients travelling for treatment and so on.

The Railways' responsibility for giving such concessions is debatable. There is no estimate of what would be the revenue forgone.

There are some good features in the performance of the Railways in 2003-04. The Interim Budget of the National Democratic Alliance expected the operating ratio for the year to be 92.6 per cent, but it has now become 92.1 per cent. Though marginal, this reflects the success of the efforts in controlling costs. If such efforts are repeated, the Railways can benefit much. That there is plenty of scope for cost-cutting is accepted even by railwaymen! Another healthy feature is that the fund balance at Rs 4,759 crore, at end-March 2005, is respectable.

The annual Plan allocation of Rs 14,498 crore takes the total in the three years of the Tenth Plan to about Rs 40,000 crore, leaving only a balance of Rs 20,600 crore for the remaining two years. This would be inadequate. A mid-term correction seems inevitable. Borrowing through IRFC has been stepped up to a dangerous level of Rs 3,400 crore.

The ratio of passenger fares to freight rates is the lowest in India. While 25.9 paise is earned per passenger km, the recovery per tonne km is 73.5 paise. If the recovery from passengers is improved to half that from goods, over Rs 7,000 crore of additional revenue can be raised. But this cannot be done in a year; it would probably take three years or so. Freight rates are overloaded. A rebalancing of fare and freight rates should have been undertaken, as indicated in the Tenth Plan document.

It is now almost certain that despite pressure from lobbyists for corporatisation and privatisation of the Railways, the Government has taken a decision that the Railways will continue to run as a departmental undertaking. But this does not mean that commercial orientation of the Railways should not be stepped up. As of now, there is no defined role for the Railways, nor is there any prescribed financial objective. Railway accounting procedures are not suited for a commercial organisation. Its depreciation accounting is not scientific, nor is there any writing down of assets. In fact, there are no detailed assets registers. Costing systems also needs revamping. All these can be done irrespective of the ownership or organisation structure that may be decided upon in future. Laying down the policy paradigms within which the Railways should work and the restraints the stakeholders should observe, should be spelt out in a National Policy for the Railways. Left to the Ministry of Railways, no action will be forthcoming because it would not like any restraints. In fact, a path-breaking recommendation, as described by the then Railway Minister in his Budget speech, made by the Poulose Committee for evolving a charter for the Indian Railways, has been gathering dust in the shelves of Rail Bhavan for the last decade.

The UPA government would be doing a great service to the nation if such a policy is evolved, as it is a sure method of ensuring greater commercial orientation for the Railways, without having to part with the ownership of assets or management. When most of the other sectors come out with policies, the reluctance of the Railways to do so is intriguing.

It is unfortunate that the Railway Budget has been boycotted by the Opposition. This is no doubt on a par with what the present ruling party had done in the past.

Whatever the justification for doing so, the disruption of proceedings in, and abstaining from Houses of Parliament as a regular feature, is a blot on the functioning of democracy. Many important pieces of legislation, and Budgets get passed without any discussion.

"No work no pay" is a universally-accepted concept, with judicial approval at the apex level, that is enforced in other walks of life.

Maybe the time has come for the Speaker of the Lok Sabha and the Chairman of the Rajya Sabha to consider whether this could be applied to the two Houses also by at least withholding the daily allowance from those members who disrupt the proceedings and abstain from the House.

This will at least lead to some savings from the daily cost of Rs 3 crore in running the Parliament during the Budget session.

(The author is a former Financial Commissioner, Railways.)

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