Budget needs to put rail economy back on track

India's fastest train Vande Bharat Express train, Train-18, at Allahabad Railway Junction. (PTI Photo)

As Finance Minister Nirmala Sitharaman gears up to present her maiden Budget on July 5 amid the back of a massive electoral mandate, Indian Railways, the lifeline of common man, will be eagerly awaiting its share.

The Rail Budget has lost much of its sheen and relevance since its merger with Union Budget in 2017-18. Since there would be no announcement on fare hike and new trains as was the earlier practice, it is to be seen whether railways will undertake the much-needed reforms to make it financial healthy and vibrant.

A dismal scenario on financial front is prevailing with a loss of about Rs 33,000 crore in passenger business and Railway Minister Piyush Goyal, who presented the Interim Budget on February 1 as finance minister, needs to curb privilege and complimentary passes and curtail expenditure on non-core sector with an iron hand and not just seek decrease of senior citizen concession burden. 

While safety would be the prime focus of the railway budget, introduction of new trains equipped with better passenger amenities are also expected. There is also a dire need for improvement in punctuality as many trains invariably run late, causing much inconveniences to passengers. Further, barring a few premier trains, rail users are still battling with unclean and smelly toilets, below par catering services along with unhygienic conditions in coaches.

Amid the dwindling revenue, there is a crying need for closing the wide gap between expenditure and earnings to keep its Operating Ratio under control. The Gross Budgetary Support (GBS) is pegged at over Rs 64,000 crore, the capital expenditure is estimated to be Rs 1.58 lakh crore for the current fiscal. GBS is mainly spent on Dedicated Freight Corridor, high speed corridor and new lines.

Since the focus is on safety and Goyal wants zero accidents in train operation, the Railways has eliminated unmanned level crossings at major broad gauge routes. But incidents of equipment failure and cattle run over on tracks are showing no sign of decrease. Budget should focus more on technology to address the problem by installing flash and alarm technology at level crossings and not rely on gatekeepers alone. In order to prevent death on tracks due to trespassing, the Railway Protection Force personnel must be deployed on vulnerable locations.

Currently, the Railways is in a fix over meeting its rails requirement for track renewal and network expansion as SAIL, the steel PSU, has not been able to supply the requirement. Railways has a requirement of about 17 lakh tonnes of rails for track renewal and capacity augmentation in 2019-20. Against this demand, SAIL has committed to supply only 13.5 lakh tonnes. Meanwhile, the Railways is yet to get a green signal from the Steel Ministry to import rails to meet its requirement.

Since earnings have not increased in tandem with rising expenditures, and while the Railways struggles with burgeoning staff and pension costs after implementation of the Seventh Pay Commission, the Budget should spell out a plan to increase revenue through various innovative measures in the passenger and goods segments. Railways outgo for pension and staff cost is Rs 50,000 crore and Rs 58,837 crore, respectively, for 2019-20 while revenue expenditure is estimated to be Rs 2.05 lakh crore.

For Nirmala, the double-digit growth trajectory is still elusive. However, the priorities have now shifted from wooing voters to putting the economy back on track.

The full budget is expected to be pragmatic rather than populist amid rising unemployment, widening fiscal deficit, farmers’ distress among others.

Notwithstanding the fact that Goyal has said there would be no privatisation of railways or its premier services, like Rajdhani and Shatabdi, the seeds of a handover have been sown in the 100-day action plan, with IRCTC getting two routes on haulage charge concept with control over ticket pricing and onboard services amid opposition from unions. The plan proposed that the trains will run on important routes like the Golden Quadrilateral and Diagonals, connecting major cities. The proposal said that the RFQ/RFP will be floated in the next 100 days to initiate bidding.

Complete electrification

The Railways has repeatedly highlighted complete electrification as its goal to do away with fossil fuel and has set a target of 2021-22 to electrify its entire broad gauge network with a total of 28,810 route km left for electrification. However, a reality check is needed. In many segments, work is half-done, though records show it as ‘fully commissioned’.

Despite the rapid route electrification drive and thrust on replacing diesel locos with electric ones, the fuel expenditure of the Railways is on the rise, belying the much-touted claim of saving Rs 4,500 crore a year on its fuel bill. The Railways spent Rs 20,555 crore in the fiscal 2018-19 on fuel bill, against Rs 17,831 crore in 2017-18. The national transporter incurred an expenditure of Rs 35.32 crore on diesel purchase during the April-May period of the current fiscal and, according to estimates, its fuel bill could touch Rs 21,195 crore by the end of the year if this trend prevails.

Modi’s agenda to transform the fourth largest rail network in the world will work only if reforms-driven agenda can be implemented with launch of passenger-friendly measures and rapid expansion of rail network with foolproof safety measures.

Goyal also needs to focus in right earnest on non-fare revenue which witnessed a slowdown during his earlier regime. The station redevelopment project which aims to bring about Rs 50,000 crore into Railways’ kitty over the next five years has also not shown any impressive progress.

Indian Railways plays a crucial role in not just passenger and goods movement, but also in economic growth. So there should be focus on safety, running trains on time, infrastructure upgradation, increasing speed of trains and enhancing passenger amenities.

The public transporter has to implement announced policies to hold on to its dwindling share in freight movement, particularly on coal, steel, cement and petroleum products which continue to provide the Railways with two-third of earnings. The Budget needs to put rail economic back on track amid dwindling revenue.

(The writer is a Delhi-based journalist)

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