Ourview | Railways and transparency

Six years ago, with much fanfare, Lalu Prasad announced that two manufacturing facilities for electric and diesel locomotives would be established at Madhepura and Marhowra in Bihar. That was when he was the railway minister. As reported in Mint today, these projects are being put on ice. Instead, chances are that a locomotive manufacturing unit in Dankuni, in West Bengal, is being quietly promoted.

While the decision to shift the project may or may not happen, a troubling lack of transparency in the ministry is apparent. It is important that in those departments/ministries where decisions are made on populist grounds, the level of transparency ought to be higher in contrast with, to given an example, the department of atomic energy where decisions are made on strategic grounds or for reasons of national interest. The railways does not like such ideas.

In its report on railway finances for the period ended March 2011, the Comptroller and Auditor General (CAG) of India had a valuable suggestion for the ministry. The Fiscal Responsibility and Budget Management (FRBM) Act mandates that the Union budget be accompanied with three additional statements reflecting the government’s fiscal situation. These are the medium-term fiscal policy statement, the fiscal policy strategy statement and the macroeconomic framework statement. CAG suggested that the railways prepare analogous statements. These would deal with, among other matters, a three-year rolling target for fiscal indicators; the railways’ investment strategy for capacity augmentation (and how it planned to finance such a strategy); policies related to pricing of its services; disclosures on deviations from policies that have already been spelt out and so on.

The response of the railways has been bureaucratic. The report notes that the “ministry of railways stated that the fiscal policies of the government are in the domain of the ministry of finance and it being only a department of the government of India, Indian Railways does not present any such statements”. CAG notes this is not an acceptable response as the FRBM Act applies to the entire Union government and is equally applicable to the Indian Railways.

At the moment, the railways is going through a rough patch. There has been serious erosion of its financial resources. It is also hostage to a political system that increasingly treats government departments as a system of spoils to be shared between equally reckless political parties to the point of ruin. If this is to end, the first step in that direction will be to make railwayfinances more transparent. That, in turn, will throw light on the dark recesses of the ministry and the decisions that it takes.

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