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Indian Rail Budget 2015: burdening to the common man


Picture source: LiveMint

  Indian Railways, Rail Budget 2015, Food Price
Last updated 28 Feb 2015 17:37:39 +0530  
In a nutshell, while making it “costumer friendly,” the Indian rail budget 2015-16 seems to have ignored the interests of the ordinary Indian, many of whom rarely travel by train to experience the improved life during a train journey but buy food to consume and need a house to live in.

The railway budget of India for 2015-16 might have been applauded by the Prime Minister Narendra Modi and his cabinet colleagues but to many the budget didn’t show desired responsibility in dealing with issues that have direct link with the food market thus the interest of the ordinary people of the country.

Going by what PM Modi tweeted soon after the Railway Minister’s speech, “The rail budget is futuristic and passenger-centric and lays out a clear roadmap to make the national transporter the key driver of the country’s economic growth – combining a clear vision and a definite plan to achieve it.”

The budget claims to be passenger-friendly by proposing, to ensure improved quality of life while travelling by train, to start services of SMS alerts, provision for Wi-Fi facility in 400 stations, improved facilities in the berths, expanding provision of bio-toilets in trains, installing ticketing machines in more number of stations, installation of cameras for the safety of women travelling by dedicated coaches etc.

“Given the importance of rail travel for our citizens we will increase our daily passenger carrying capacity from 21million to 30 million. We will also increase track length by 20% from 1,14,000 km to 1,38,000 km, and we will grow our annual freight carrying capacity from 1 billion to 1.5 billion tonnes,” the railway minister Suresh Prabhu said during his budget speech.

“Over the next five years, we envisage an investment of Rs. 8.5 lakh crore,” the minister added highlighting that “our priority will be to significantly improve capacity on the existing high-density networks. Improving capacity on existing networks is cheaper.”

“This is a watershed moment for Railways, marking a paradigm shift from discussing coaches and trains to comprehensive railway reform,” said the PM applauding and terming the rail budget 2015 as focused on the common man, putting speed, scale, service and safety, all on one track.”

The budget however didn’t make any reduction in passenger fares despite the fall in diesel price and the provision, in the current rail budget, for a further reduction of freight charges on diesel by 1%.


Quotation starts

Going by the last rail budget wherein there was a plan holiday on new rail lines, it may not be different this time as well. However, Railway Minister may rather focus on completion of the pending projects than announcing new ones.

Quotation ends

Railway ministry is totally different from all other ministries of central government because other ministries get outright grants whereas Railway earns every penny it spends.

Shortfalls and challenges

The greatest drag on present Railways is its subsidy for passengers (about 30,000 crore rupees) which is not coming from the general exchequer but is cross-subsidised from freight to passenger. Railway passenger fare in India today is the cheapest in the world - one fourth of China. Its freight is one of the highest, only because of this cross subsidisation. As a result, poor people of the country have to bear the brunt by facing indirect taxation as because essential commodities are transported by railways and the common consumers have to pay for that.

India's export products become costlier and uncompetitive in the world market because of the high freight rate. In many of the developed European countries their government subsidise the railways towards the losses incurred on passenger traffic. For example, the United Kingdom released 2.3 billion pound in 2013-14 to their companies on this account. The loss per passenger KM for Indian Railways has increased to 23 paise by the end of March 2014. Therefore, Railway Minister has already stated that reduction in passenger fares is unlikely in the ensuing railway budget despite sharp fall in diesel price. On the top of that new railway line projects are often announced during the Railway Budget annually without securing additional funding for them. In the last 10 years, 99 New Railway Line projects worth 60,000 crore rupees have been sanctioned, of which only one is complete till date. In fact, there are 4 projects with Railways that are as old as 30 years but are still incomplete for one or the other reason. It is estimated that, to complete all the pending rail-projects it requires five lakh crores of rupees, which is a tall order.

Safety concerns

With rapid increase in passenger and goods traffic, frequency of train accidents is increasing. This has raised serious concern about safety of Rail travel and the general health of the rail network. Thus the credibility of an organisation with a long and proud history of nation building is eroding. The Khanna Railways Safety Committee had reported that Indian Railways have 34,000 overage wagons, 1,322 overage coaches, and 1,560 stations with overage signalling. Moreover, 262 bridges are listed “distressed.”

The white paper released by Indian Railways in April 2003 acknowledges that over 51,000 bridges are of 19th century vintage. Out of a total of 1,27,154 bridges in India, 56,178 are more than 80 years old. Thus 44.17 per cent of the bridges have outlived their life.

According to the review conducted by the Comptroller General of India on various aspects of bridge management between 1997-98 and 2011-12, these old bridges include 339 important, 4,210 major and 51,629 minor bridges built before 1920. Resource crunch is said to be the main cause of all these weaknesses and shortfalls.

Nation’s crucial network

Railways provide the cheapest and most convenient mode of passenger transport both for long distance and suburban traffic. Railways have played a significant role in development and growth of industries. Growth of textile industry in Mumbai, jute industry in areas surrounding Kolkata, coal industry in Jharkhand etc. has been possible largely due to the development of rail network. Railways help in supplying raw materials and other facilities to the factory sites and finished goods to the market. Railways are particularly suited to long distance journey and provide a strong thread of national integration.

Railwayss play a vital role in mitigating the sufferings of the people in the event of natural calamities like droughts, floods, famines, earthquakes etc. by carrying relief and rescue teams and essential items to the affected areas to save people from sufferings and starvation. The services rendered by Railways, immediately after the Super cyclone of 1999 in Odisha is the testimony of that.

Budget of Hopes

Railways make the backbone of the national economy and it has bigger role to play if India has to emerge as a super-economic power. For this the Railways require massive investments to increase its capacity and upgrade itself to meet the newer transport challenges with speed, predictability and safety.

Funds are needed for many things: augmenting rolling stock and improving the quality of wagons and coaches, building new-lines, upgrading electronic signalling to ensure that tracks are not lying idle, and strengthening track and bridges for high speed train movement. To do all this, major reforms including structural changes are required.

In his first Budget, Railway minister Suresh Prabhu is expected to announce a series of measures for improvement in the financial health of the ailing national transporter. Ever since Suresh Prabhu has taken charge of the Railway Ministry, he has made it clear that he is more concerned with the turnaround in Indian Railways than taking the populist path. Expectations are high from the Railway Minister amidst the latter’s firmness to bring in fundamental changes in the commercial and operational aspects.

Rail connectivity tops the expectations chart in every region. However, in far flung states of the Northeast region, rail connectivity remains an issue even after 67 years of Independence. It is expected that the region will be connected by rail, and efforts are being made in this area at the fastest pace. As a strong message in this regard recently, Prime Minister Narendra Modi inaugurated new rail-lines in Arunachal Pradesh.

Going by the last rail budget wherein there was a plan holiday on new rail lines, it may not be different this time. However, Railway Minister may rather focus on completion of the pending projects than announcing new ones.

In its maiden Budget last year, the NDA government hiked passenger fares by 14.2 percent and freight rates by 6.5 percent - the steepest rise in 15 years – in a politically controversial move. The fare hike was announced to fund new wagon purchases, to modernise tracks, revamp lines and improve safety.

The government, in its Budget announcement last year, said that it would closely monitor implementation of the Eastern and Western Dedicated Freight Corridor Projects (DFCs). It had also set a target of nearly 1000 km of civil construction contracts.

It must be noted that the 3,300 km long project, which will crisscross various states, shall transform India's freight transport facility. It is expected that the Railway Ministry will come up with a concrete plan to fast pace the DFCs connecting Delhi to Mumbai and Ludhiana to Dankuni in West Bengal. Similarly. It is expected that, keeping the present scenario in view, the Minister may announce only a few new trains.

In the present scenario there is limited scope for additional government support for Railways projects.  Therefore, Railway Minister Suresh Prabhu has spoken on the need to connect with the state governments. For that, Minister is roping in state governments to form Special Purpose Vehicles to fund and construct rail-projects. The Cabinet in August last year had approved a proposal to open up Indian railways to foreign investment by allowing 100 percent FDI in areas such as high-speed train systems, suburban corridors and dedicated freight line projects to be implemented in PPP mode.

However, under pressure from trade unions, the government denied of having any intention to privatise the Railways. The government must find a midway to tackle the crisis arising out of resentment from the trade bodies and at the same time make sure that it ably infuses funds into the cash-strapped railways.

Adhering to Prime Minister's dream of “Swachh Bharat,” it’s expected that Railway minister would come up with a concrete plan for cleanliness and maintenance of the sector. The Railway ministry has not done much towards increasing bio-toilets in sufficient numbers of trains to mitigate the problem of direct discharge of human waste on the tracks and platforms. So, it is believed that the government comes up with a roadmap for future course of action to deal with issues related to hygiene, cleanliness and sanitation.

Also, a lot needs to be done over the security issue. Every year, the government promises ample steps to ensure safety in trains and platforms. However, the promises rarely turn into reality. The government has to make sure that it fulfils the promise of deploying escorting RPF teams in trains, escorted coaches for ladies, multi-pronged approach to eliminating unmanned level crossings and building boundary walls around stations, among others. Use of solar energy in a big way, launching of waste-to-energy projects and proliferation of CNG in train operations are some of the green initiatives likely to be announced in the Rail Budget this time.

The Odisha Case

As far as Odisha is concerned, going by the overall trend and financial position of Indian Railways, there is rare possibility of announcement of new rail line project in Odisha. But, at the same time, special emphasis may be given on early completion of important on-going railway projects in the state. Adequate fund is due this time for the long cherished Khurda-Bolangir rail line as state government has agreed to provide required land free of cost as well as to bear 50% of the cost of the project. This is a first of its kind gesture from Odisha government to boost expansion of rail network in the state.

Similarly considerable allotment is expected for Talcher-Bimlagarh rail line as the construction work has picked up momentum. Besides, two other new rail line projects, Angul-Sukinda and Haridashpur-Paradip are being executed under PPP (Public Private Participation) mode and Railways have already released their due shares for these projects through Rail Vikash Nigam Limited. State Government has ensured acquisition of required land for these two projects. With land and fund already available these two lines could be completed in near future. Further Odisha government has agreed to participate in a SPV (Special Purpose Vehicle) for expeditious expansion of rail net-work in the state.

So, concrete budgetary provisions for completion of the ongoing projects in the state would be in the best interest of the state so far as expansion of rail network in Odisha is concerned.

The nation also hopes that the 2015 Railway budget would set a turning point in the growth of Indian Railways.

[Author is the Managing Director, Angul-Sukinda Railway Ltd.]

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