The railway budget is an annual exercise in deluding the country. Various schemes are launched, new rail routes (replete with nice-sounding trains) opened and, after some unpleasant arithmetic on finances, the minister gathers congratulations (usually for a “dream” budget or for keeping the “people’s” interests in mind) and moves on. The country never hears the expression “Railway Budget” for the next 365 days. This ritual pre-dates 1947: There has been no Independence Day here.
Illustration: Jayachandran / Mint
It is time the railways gained independence from pernicious political control. An independent regulator that sets tariffs, approves expenditure and does not permit route expansion merely because that serves “social” purposes is needed now. There are good reasons for that.
Today, the railways is not a partner in promoting India’s growth. Achieving 9%-plus growth requires that transport infrastructure be industry-friendly. This implies good connectivity at competitive prices and an extensive network that permits movement of industrial and other goods to any destination in the country.
The railways violates these requirements as a rule. The passenger fare to freight ratio (the ratio of tariff per passenger km to cost per tonne km) is one of the highest in India. At 0.3:1, it means that it its cheaper for passengers than for moving goods. That figure is 1.5:1 for China and 1.9:1 for Japan. The results are obvious: The railways commands only 30% share in freight traffic. The rest is lost to road transport.
That is not all. Between 1990 and 2007, India added only 960 route km; China added 20,000km. The Chinese plan to add 40,000km in the next 10 years; India has an ambitious target of 250-300km.
The reason for this state of affairs is simple: The railways has little or no money for route expansion on the scale desired. For example, nearly 60% of the funding for the dedicated freight corridor (total cost Rs50,000 crore) is to come from Japan and other multilateral lending agencies. The railways simply cannot fund such projects anymore, nor will it be able to do so in the future.
There is no need to look much further. The use of this portfolio to placate difficult coalition partners or powerful politicians in any government has been the bane of the railways. Most of the facts highlighted above can be attributed to political decision-making. This will never end. Unless, of course, the political interference from the minister in setting tariffs and deciding routes is ended. That can only happen if there is an independent regulator.
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