The Indian Railways is doing well. Even after making provision for the Sixth Pay Commission, Lalu Prasad forecasts a healthy operating ratio of 81.4%. The railways may still be tested, if the economy slows down at the same time that the pay commission recommendations come into effect, but for the moment, all is well. The minister has done well to share some of this growth with the employees in terms of increased benefits, but more than employees, this year’s budget is targeted at improving passenger experience across the board, from the time the ticket is booked to the use of the station and in-train travel.
Now, if better service is offered, the amount of freight transported by rail will improve, but does the same logic apply to passenger services? If service was improved, would more people travel by rail? In my estimate, this increase will be much less than freight—and that is the big difference between Prasad’s success with freight and the passenger-friendly initiatives unveiled in this budget. While each of these initiatives has a cost, there may not be a commensurate commercial benefit for many of them, if the choice between rail and other modes is not made on considerations of service, but on considerations of time. Here, high-speed trains may help, but in-train TV may not, pleasant as it may be to existing travellers.
The focus on passenger amenities in this budget may be driven by electoral compulsions, but that is not the reason I begrudge them. Rather, it is the removal of attention from the unfinished freight agenda that is worrisome. The minister claims that the rationalization process for freight charges is complete, but the entire basis for rail freight is untenable. The charges are still determined on a commodity basis rather than on the basis of weight, volume, etc. Rather than being finished, this task has not even begun. While the railways needs to be commended for the use of peak load pricing, a lesson that electricity regulators will do well to learn, the price structure is still rather inflexible, with uniform central discounts rather than fine-tuning based on local business realities.
As for capacity augmentation in both track and rolling stock, while there does seem to be an understanding of the kind of investment that would need to be made, especially the linkage to ports and increase in capacity for coal and steel freight, the railways still seems to be wary of public-private partnerships (PPP), limiting them to real estate development and pilot BOT (build, operate, transfer) projects, even as it targets them for 40% of the investment plan. Even though private container trains account for 44 of 190 trains, they account for only less than 10% of the traffic. Much of this can be attributed to shortcomings in the railways’ PPP models, but the solution is to get good external help and avoid the approach adopted by the Planning Commission.
Prasad’s electoral instincts are perhaps most evident in the plan to recruit porters as gangmen. While it is imperative to staff the unmanned railway crossings in many places where a rail overbridge is not sensible, there is enough surplus in the railways’ million-plus workforce that can be redeployed. Increasing the number of unskilled employees is not the way to modernize. The railways has still a long way before it can call itself a business enterprise.
Lest I sound too dismal, let me list the initiatives I Iike. The increase in ticketing outlets is my favourite, though automatic machines are an unnecessary experiment. Foot overbridges are necessary safety features, though ramps would be preferable to escalators. But the best of all is the common ticketing arrangement with buses in Mumbai. Along with the plan to provide parking at stations, one can begin to think of the railways as part of a truly integrated urban transport system.
In sum, the minister is resting on his laurels, but in an election year, can one blame him?
Partha Mukhopadhyay is senior research fellow at the Centre for Policy Research, New Delhi.