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New Delhi: If Suresh Prabhu’s first three months in Rail Bhawan are any indication to go by, the minister’s maiden railway budget on Thursday will be a mission document. It’s a given that the ailing Indian Railways needs an overhaul. The political will to bring the necessary transformation, however, has only come about with the assumption of power by the Narendra Modi-led National Democratic Alliance (NDA).

Modi’s move to replace Sadananda Gowda with Prabhu in the government’s first cabinet expansion in November was seen as a sign of the prime minister’s focus on reforming the railways.

Modi had reiterated his intent on 25 December at an event in his constituency of Varanasi.

“We don’t see the railways only as a means to travel. We see it as the backbone of India’s economic development. We have to take the railways ahead and through the railways we have to take the nation ahead," Modi had said at the inauguration of the expansion of Diesel Locomotive Works there.

Prabhu who quit the Shiv Sena and joined the Bharatiya Janata Party to deliver on the promise, hit the ground running.

His first 100 days as railway minister have seen the ministry form 10 committees and task forces to address issues that are key to starting the reform process: restructuring of the organization, improving the financial health of the railways, exploring alternative funding resources, prioritizing projects, decentralization of power, bringing in transparency and accountability and improving productivity of the railways.

Set strict deadlines by Prabhu, most committees and task forces have turned in their recommendations on time.

In fact, Prabhu has even implemented the suggestions of one of them—the E. Shreedharan committee’s interim report on decentralizing the tender process. In line with its recommendations, the railway ministry has delegated decision-making powers for contracting railway works and services to field officials to facilitate faster execution of projects, thus starting the process of decentralization of functional powers.

More on the road map for such reforms is expected of Prabhu who comes with the reputation of being a result-oriented leader credited for introducing reforms in the Indian power sector when he was part of the Atal Bihari Vajpayee-led NDA government.

Prabhu was then a minister in the Union cabinet for six years, handling portfolios such as industry, environment and forests, chemicals and fertilizers, heavy industry and public enterprises and power.

Experts have high expectations of Prabhu’s railway budget.

“Railway minister should continue to steer clear of populist measures. So many committees have been formed, so an announcement that will underline his intent of carrying out reforms and give the direction that this government hopes to pursue will be expected on the lines of further empowerment of the regional levels of the organisation, outsourcing non-core railway activities to private firms in a scientific manner and so on," said Amrit Pandurangi, senior director at Deloitte Touche Tohmatsu India Pvt. Ltd, a consulting firm.

Prabhu’s script for delivering the promised turnaround will have to go beyond the expected measures to improve railway’s operating ratio, a key measure of its efficiency. While the previous budget made clear that the NDA government will not shy away from tough decisions to put the railways back on track, it lacked in specifics on the road map to achieve the Prime Minister’s vision of restoring the primacy of the Indian Railways.

Attracting private and foreign investments, mobilizing alternative resources such as investible surplus of railway subsidiaries and rationalizing of the railway’s financial resources were the key features of the railway budget of 2014-15. Prabhu’s challenge will be to spell out how the government aims to achieve these.

“There has been no real progress in attracting private investment in the railways. The railway minister should probably focus on just three-four big PPP (public private partnership) projects and implement them to send a message about the seriousness of railways to attract PPP. Also, the minister should use the opportunity opened with the cooling off of oil prices to hold on to the freight rates that are already too high to improve railway’s competitiveness in this segment," said Pandurangi.

Prabhu is believed to be mulling ways of tapping long-term financing such as insurance, pension and provident funds to invest in building and modernising the ageing railway infrastructure, said a government official who requested anonymity.

Railways requires a whopping 1.82 trillion just to complete 357 pending projects. Various committee findings have estimated an investment of around 6.6 trillion to modernise the railways and for introducing advanced safety measures.

Chandrajit Banerjee, director general, Confederation of Indian Industries, said, “CII expects the Railway Budget to initiate measures to bring down its operating cost, enhance budgetary allocations and introduce innovative financing mechanisms, including strengthening of PPP, to go for modernization of railways as well as acquisition of new technologies. CII also expects the Railway Budget to announce plans for long-term growth, improve its freight share through better customer orientation and develop a robust railway equipment industry in India."

The politically sensitive issue of fare change, however, is unlikely to feature in Prabhu’s first railway budget. On more than one occasion recently the ministry has indicated that it will not change fares in the budget announcement.

Prabhu is also expected to table the white paper on the state of Indian Railways that he commissioned soon after taking over as the railway minister.

Vangmayi Parakala and PTI contributed to this story.

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