Raghu Dayal

While the Rail Budget acknowledges that in a competitive market success comes not by raising tariffs, but raising the quality of services and reducing costs, it is silent on how to sustain freight and passenger traffic levels. As a key infrastructure support behemoth, the Railways must set out a long-term road map if it is to help the economy maintain its speed, says RAGHU DAYAL.

The Railways Minister, Mr Lalu Prasad, presenting the Rail Budget 2006-07, termed as a record-breaking performance the freight and passenger traffic output in the first three quarters of the current fiscal, which saw the Railway's freight movement improve from 635 million tonnes to 668 million tonnes and the revenues rising by as much as 18 per cent.

Likewise, passenger and other sundry earnings also improved during the period by 7 per cent and 56 per cent respectively over the first nine months of the year. The overall gross traffic revenues are estimated to rise by 16 per cent over the previous year. The Railways has thus achieved healthy financial results, "a historical turn around," in the Minister's words.

It is gratifying to find the Minister acknowledging that the basic mantra for success in a competitive market is not raising tariffs, but reaching the benefits of reduced costs to customers, raising the quality of services, reducing unit costs, and sharing the resultant gains with customers.

SERVICE with a smile

With a resolve to observing 2006 as "the year of passenger service with a smile," the Railways has started talking of customer-friendly services, in terms of increasing capacity on 190 popular trains, each hauling 24 coaches; accelerating some 200 mail and express trains to superfast status, cutting down the journey time of most Shatabdis and Rajdhanis; improving amenities on trains and at stations; providing for ATMs and cyber cafes at major stations; incorporating new technologies and design in select Rajdhani passenger coaches, and providing four popular trains "with world-class amenities and interiors".

It is indeed significant that Mr Lalu Prasad announced his intention to "cut losses in the coaching services by about Rs 100 crore in 2006-07 and by 5 per cent in the next three years. A twin objective strategy the Railways hopes to follow is "increase volumes, reduce unit costs".

The Minister has expressed an eagerness to explore the possibility of cutting losses in parcel and catering business as much as passenger business with an overall objective of "increasing volumes and reducing unit cost".

The Budget has spared rail users from an across-the-board increase in fares and freight charges. It has rightly decided to reduce AC-I and AC-II fares, especially in the context of competition from budget airlines.

The Railways has made a commendable beginning, first, to initiate some user- and passenger-friendly measures and, second, to launch and re-emphasise operational and maintenance practices tried out in the past for the increasing carrying capacity as also the profitability of the organisation.

With an outlay of Rs 23,475 crore for the Railways' Annual Plan 2006-07, "the largest ever," the Minister maintained that more than two-thirds of this provision would be mobilised through internal generation and extra budgetary resources.

THE NON-ISSUES

But on the other side of the coin, it has to be noted that the Budget speech was punctuated with the familiar non-issues and those that are nothing but clear signals to the constituency. Where is the justification for 55 new passenger trains, and extension of many old trains? A clear need is to consolidate and rationalise services with a virtual moratorium on new trains keeping in mind issues of safe and comfortable services.

Again, a whole catalogue of surveys for new lines and new projects — as many as 23 of them — has been included. There are assurances galore made in the past by Mr Lalu Prasad's predecessors for model stations, high speed (150 kmph) Shatabdis and Rajdhanis, as also for high levels of passenger amenities. But all this are yet to happen.

The country's highest legislative and policy-making body, Parliament, must insist that an infrastructural support behemoth of the importance of the Railways set out a long-term strategic roadmap for tackling the challenges thrown up by an economy on the move; only then can India be in the vanguard of the global economic upsurge.

The Rail Budget outlined no long-term measures to sustain the present level of traffic or trigger new areas of growth, except the proposal for dedicated freight corridors. Nor also a word on organisational matters — restructuring, reorganising and regrouping the system, and shedding of flab, for example.

Needed, new thinking

The Railways has provided Rs 1,097 crore for its security apparatus, Rs 693 crore for repair and maintenance of residential and welfare buildings, Rs 913 crore for medical services and health and welfare activities, and Rs 108 crore for education facilities.

Its annual stores purchases exceeds Rs 12,000 crore. These, among others, are areas where the Railways needs to enforce economies by way of out-of-the-box solutions and initiatives.

The Rail Minister has realised that the "Railways manpower needs have to be rationalised," "that the employees have to be equipped with multiple skills".

There are more than 4,00,000 Group `D' employees. With new costly technologies being inducted, there is a clear case for this huge reservoir to be optimally trained and used appropriately. There is also a need to streamline and rationalise the senior level posts.

(The author is a former Managing Director of Concor.)

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