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Home / Specials / Union Budget 2014 /  Rail budget: Reading the signals

Whatever pleases his people, the ruler shall consider good" signals populism. But, the new railway minister’s signals are not as straightforward. Tucked into his speech are two sentences proposing to “separate" the Railway Board’s “overlapping roles of policy formulation and implementation". A little over a year ago, China sentenced a former railway minister to death and abolished the ministry of railways. It transferred planning and policy-making functions to the ministry of transport, administration to a specialized agency, and commercial activities to the China Railway Corporation.

Will the new minister be as radical? So far, long-standing silos within the Railways have forestalled this, but should he choose to walk this path, he would have many distinguished fellow travellers. The board has been a favourite target of reform committees, be it Tandon in 1994, Mohan in 2001 or Pitroda in 2012. All three focused on moving it away from its current functional focus to a more “lines of business" character, reflecting the different needs of freight, long-distance and suburban passengers.

The core problem of Indian Railways is that it makes its money from carrying freight, but its efforts to increase traffic are stymied by lines clogged with passenger trains. So, given the lucid diagnosis early in his speech, one had hoped for another signal of departure from business as usual. But, after the usual perfunctory demurral on resource constraints, there was the customary list of new trains, albeit in two digits, helped by the largesse of his predecessors. A statement that there would be no new trains—well, maybe one in Kashmir, one for the new Andhra Pradesh and a couple for the North-East—would have strongly signalled a new Indian Railways. Instead, one often heard of Bangalore and Ahmedabad.

But, there are many positive signs.

Promises of pleasing the people have been limited to better food, cleaner stations and trains, a faster and quicker booking experience and more police. That is good, especially since it is sugar-coating a price increase that will reduce the operating ratio from 95.4 to 90.8, if optimistic revenue targets are met. On pleasing, the minister could also consider redeploying staff from a workforce of 1.3 million to man the 11,563 unmanned crossings, until something is done. Surely, this safety intervention is low-hanging fruit?

There is also evident energy to complete capacity augmentation instead of new lines, flirting with FDI (foreign direct investment), rekindling of the romance with PPP (public–private partnership) and a threat to raid the railway PSU (public sector undertaking) treasuries (if rail infrastructure projects did “generate attractive returns", would investors be reluctant?). But, over half of our rail freight is coal and iron ore, which is transported by captive railways elsewhere. The railways need to allow cash-rich PSUs such as Coal India Ltd and large mining firms to expand their involvement in coal and iron ore connectivity.

Fortunately, the Rail Tariff Authority finds no mention. A commercially responsive railway aggressively competing with road transport for freight should not have its pricing hampered by regulation. There are hints of pricing flexibility—of automatic rebates on routes where wagons are returning empty—but one will wait and watch. Using GIS (geographic information system) for land management can be a big positive, as can the kaizen (continuous improvement of processes) initiative.

On the other side, for a government that is so enamoured of technology, there was no mention of signalling investments that could add significantly to capacity. The saving grace is that it may come as a co-benefit of the obsession with high-speed trains, which cannot run without cab signalling. It would be a pity if all capacity expansion was just doubling of lines.

Further, to secure a higher share of non-bulk cargo, especially containers, the railways needs to act as a logistics firm. But while the award of 1,000km of DFC (Dedicated Freight Corridor) contracts is targeted, there is only fleeting mention of “door-to-door delivery" and no indication of operational partnerships.

Having bitten the Ahmedabad–Mumbai bullet, the choice remains between Navi Mumbai and Mumbai. If the former, not only will it be much more implementable, it will boost the effort to move Mumbai inland. Hopefully, this will also put Mumbai’s elevated corridor project to rest.

Overall, a budget with radical possibility and thus far, limited downside. Acche din? Maybe, but not just yet.

Partha Mukhopadhyay is a senior fellow at the Centre for Policy Research, New Delhi.

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