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Source: media reports

A statement of cultural commitments

A statement of cultural commitments
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First Published: Thu, Feb 25 2010. 12 41 AM IST

Updated: Thu, Feb 25 2010. 12 41 AM IST
A defiant railway minister pleaded with the finance minister to defer the dividend the railways was due to pay the exchequer. After a good slugfest, the dividend was deferred and the railways announced a meagre earning of Rs700 crore—a figurehead to hide that it could meet its expenses.
Halt: that’s not 2010. This was exactly 10 years ago—in the spring of 2000 when Mamata Banerjee first became railway minister. In many ways, the situation has come full circle. And just like last time, Banerjee only has a horizon of one-and-a-half to two years.
The Railway Budget bore the stamp of Banerjee’s pet theme of maa, mati, manush (mother, land, people), as she announced hospitals, sports academies, schools, museums, bottling plants and insurance scheme for porters. For the first time in recent memory, the speech till 12.45pm referred only to social projects.
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The list of newly proposed railway lines and the lines to be taken up for survey looks like a veritable aggregation of every demand presented by members of Parliament. Not all of them are expected to take shape as there is a rider that each one will be taken up with the Planning Commission for approval.
The total of socially desirable new lines, lines to be surveyed, lines for which gauge conversions are to be surveyed, and the North-East-related projects actually goes to a whopping 207. So the list actually reads like a vein and artery network of India, certainly not all to be achieved in one year, and some to never even be started.
Freight push: Mamata Banerjee declared this would be the year of wagons, which means a focus on enhancing freight-carrying capacity. In the past, the railways has been partly successful in attracting investment here. Rajkumar/Mint
The target of the annual addition of 1,000km in the year 2010-11 is a mere copy of the Chinese benchmark. The Indian Railways has rarely achieved that, and with the burden of the Sixth Pay Commission, it is going to be all the more tougher. It increased the running personnel expenses by Rs12,000 crore. The list of new trains will take more than a year to be operationalized and some could be operationalized well into the latter half of 2011.
There are two parameters that seem to be frightening enough—the operating ratio has swung to 92.3% and is expected to stick there. If even half of the envisioned 1,021km of tracks are constructed and the projected internal accruals do not take place, the operating ratio of the railways will cross 98% or 99%, taking it back to the brink of bankruptcy.
This situation will not be dissimilar from the year 2000. In the earlier part of the decade, it was a booming economy, a heightened freight capacity and an iron ore boom, which substantially enhanced freight revenue. One does not know if that will be repeated.
Another disturbing projection for 2011 is the earnings left behind after paying the dividend to the Central exchequer. It is just Rs941 crore. This effectively means that the railways is going to depend on the exchequer and the Indian Railway Finance Corp. Ltd to fund its plans.
The two targets set for increased revenue are doubtful. The target for non-core business revenue has been heightened substantially from Rs150 crore to Rs1,000 crore. The railways has traditionally failed to tap these revenue streams. Just four days ago, it closed down 50 or more cybercafes started in the late 1990s to tap non-core revenue, saying it cannot run them. This revenue mobilization, therefore, looks doubtful. Similarly, the freight target has been raised to a substantially higher number of 944 million tonnes.
However, there are two features that this budget is positive about. Banerjee has decided to explore the route of commercial exploitation of the railways’ assets, though by taking the unions into confidence. This was repeatedly said at the beginning of the speech. That is a step in the right direction and an indirect admission that the sources of funds could dry up. Another important declaration was that this would be the year of wagons, which does mean a focus on enhancing freight-carrying capacity. In the past, the railways has been partially successful in roping in investment here.
The budget is more a statement of welfare and cultural commitments, and less a statement of accounts. Whoever succeeds Banerjee in Rail Bhavan will have to burn the midnight oil to put things back on track. If not controlled, this could be an Air India in the making.
The writer is a Mumbai-based political analyst and independent researcher on transportation.
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First Published: Thu, Feb 25 2010. 12 41 AM IST