Let’s try an old-fashioned exercise: holding politicians to their promises. In her February budget speech, Union railway minister Mamata Banerjee promised to revamp the dedicated freight corridor (DFC) and set up a new authority to plan projects.
Five months later, there’s neither a hint of revamp nor a new authority. Instead, as Mint reported on Wednesday, the costs of the DFC have shot up threefold in just four years—all this before any actual progress.
As any businessman who’s tried to move goods within India will attest, this progress is essential for growth. A recent New York Times report points to today’s pitiful state: It takes goods four days to travel 4,500 nautical miles from Singapore to Mumbai, but it takes two weeks then to travel 870km to New Delhi by rail. With congested lines—passenger and freight share the same tracks—it’s a surprise business even gets conducted.
That was the motivation behind the DFC: a western corridor connecting the busy Delhi-Mumbai route, and an eastern one linking Punjab to West Bengal, committed to freight. The government got a start last year with a Rs17,700 crore Japanese loan. So what’s the problem?
First, infrastructure in India seems to suffer from a “misplaced target” syndrome. It’s always easier to tout large aims— 20km of roads a day, 78,700MW of power—and low costs, and later revise them, than make earnest attempts to solve the fundamental problems (finance, land acquisition) that can later help meet such targets.
But caught in this game are opportunity costs. By the time policymakers get around to making accurate revisions, input costs can change; inflation is now plaguing the DFC. And we can’t begin to imagine how much business India loses.
These costs will only increase, second, if politics forces more delays. Consider the political incentives: If the railways gains revenue off freight, and if the DFC involves a new public sector company that instead rakes in the cash, why would this ministry push the DFC through?
Added to that is the railways’ perennial populism: Boosting passenger services translates into votes, freight doesn’t. And when you have a Union minister more interested in winning votes in her home state—note the “social responsibility” Banerjee emphasized as her mandate in her budget—the only promise that matters is the one that guarantees quick votes.
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