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Is The Rail Minister On The Right Track?

Updated: March 12, 2011 3:00 pm

The Railway Budget may be a tough task for Mamta Banerjee this year as the Railway Minister has to play the dual role to avoid controversies.

The Railway Budget for 2011-12 is very important for the Trinamool supremo as Mamta Banerjee will strive to boost more funds to West Bengal, keeping in mind the upcoming and probably her life’s one and only agenda to take charge over the Wrighters’ Building the administrative headquarter of the state. On the other hand, it will not be easy for her to limit the existing problems in the Indian Railways like decreasing revenue, shortage of funds, too many projects to execute and building up new railway tracks.

                Currently, the Indian Railway’s savings is at stress as the rail is spending Rs 95 to earn a sum of Rs 100. The best way to cure it is to increase the revenue and decrease expenditure. Under her stewardship, expenditures have gone up by Rs 1,330 crore and earnings are sharply dipped by Rs 1,142 crore, taking the net deficit to Rs 2,500 crore. To increase the revenue, railway need to increase the price of passenger tickets and freight rate. But, the public opinion suggests that the expansion in the fare of ordinary and Air Conditioned class will not be implemented in this year’s budget as Banerjee will never want to spoil her popular ‘didi’ image, especially just before two-three months of the assembly election of Bengal.

                It is a fact that for the last ten years, no Railway Minister raised the passenger fair and freight rate, the only source of railways’ income, when the price of all commodities in the country rose sharply. So, Banerjee is not the only one who took a populist ride on the monopoly track of Indian Railways.

The Financial worries

Though, the fact cannot be ignored that too many projects have been announced by the Railway Minister to gain political mileage, but there is an acute scarcity of funds to execute them. It was promised by the Railway Minister in the railway budget for 2010-11 that 1000 kms of new railway tracks would be built. But actually, only 220 kms of railway tracks or 20 per cent of the promised task had been done, suggests recently-published railway data source. According to the railway official records, as many as 42 new lines covering a length of 4,060 km at a cost of Rs 16,693 were included in successive railway budgets in the last five years. Looking at the national average (4060 km/5 = 812 km), it is clear as daylight that the pace of work is slow during Mamta’s regime. The Indian Railways finds it difficult to execute the projects that are already in hand and will require an investment of Rs 80,000 crore. The new projects are bound to add to the ‘backlog mountain’ as the finance available with the Railways permits it to take up projects only worth Rs 9,000 crore each year. The Operating Ratio (OR) of the Railways is likely to be the highest in recent times. The ratio—the sum spent to earn a sum of Rs 100 is the best indicator of Railways’ financial health. In 2001-02, the operating ratio had become as high as 96 per cent. One of the best ORs in recent times was in 2007-08 when the rail spent as little as Rs 75.9 to earn Rs 100. The ratio has crossed 95 per cent, higher than 92 per cent estimated in the last budget. With less than one month still remaining for the financial year to be over, the financial crunch within the Railways can be gauged by a worsening operating ratio.

                Just before few days of the announcement of the Rail Budget for this year, Mamta Banerjee has recieved a red signal from UPA. While the non-resident Rail Minister has urged Pranab Mukherjee for doubling the budgetary support to Rs 39600 crore, the Finance Ministry asked for certain disciplines in the operation system of railway in return. The Prime Minister Dr Manmohan Singh, including the Finance Minister and Planning Commission Vice-Chairman Montek Singh Ahluwalia are worried lot about the poor health of railways as Banerjee takes no advice.

                The poor financial condition of railways shows that Banerjee’s vision is not guided by a long-term growth plan. To achieve a GDP growth of 9 per cent, total transport requires to grow at 10 per cent per year where the Railways is growing at only 7 per cent, affecting the logistics industry heavily. Dedicated Freight Corridor (DFC)—the golden project of the Railways is also on the verge of derailment due to the problems of land acquisition in many states. An immediate review of the status of DFC with clear timelines and fixing responsibility is the need of the hour. To add to the woes, Railways have put on hold all public private partnership (PPP) projects, including proposed plants at Kanchrapara in West Bengal and Madhepura and Marhora in Bihar. It is vital at this point that Banerjee must bring discipline to the expenses. Otherwise, the only option left with the UPA government is to rethink the suggestion made by the Rakesh Mohan Committee in 2001 for corporatising the railway system instead of a separate ministry for its operation—freeing the nation’s biggest public utility from the political cobweb.

By Samarpita Roy

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