The
Railway Budget is notable both for the absence of big-ticket schemes and for its quiet emphasis on process changes that hold the promise of ushering in long-term improvements in the viability of the Indian Railways. Given the backdrop of a shortfall in traffic receipts — exacerbated by
low freight demand from the core sector — Railway Minister Suresh Prabhu’s projection of savings of Rs.8,720 crore compared with budget estimates for the current fiscal year reflects a finance professional’s approach in adopting austerity measures to contain costs. Building on those gains, the budget has projected that notwithstanding the substantial jump in salary and pension costs consequent upon the implementation of the Seventh Pay Commission’s recommendations, the impact would be minimised to an 11.6 per cent increase in working expenses next year. This will lead to a two percentage point rise in the operating ratio. To address the resultant paucity of funds for capital expenditure, the Minister plans to step up efforts to monetise various assets, including land, and boost non-fare revenue, use the private-public-partnership model more extensively, and work jointly with State governments to both formulate and fund region- or city- specific projects. Citing the international average of 10 to 20 per cent of railway network revenues accruing from non-tariff sources, the budget sets a goal of bringing that share on a par over the next five years from the prevailing sub-5 per cent. Mr. Prabhu has rightly realised that a major challenge is to recover lost ground in freight haulage, where a persistent decline has had a negative impact not only on the Railways’ finances but on the economy as well. The approach enunciated to address this spans three key tacks — expanding the freight basket by moving away from dependence on bulk commodities, rationalising tariffs to stay competitive and building terminal capacity. From containerisation to roll-on/roll-off, time-tabled freight trains, and long-term tariff contracts, the budget has posited several steps to regain the market share of the Railways in goods transportation.
Given the political constraints on resource mobilisation the Railways faces in a year of a major round of Assembly elections, Mr. Prabhu has taken a therapeutic approach to ensure a long-term solution. Aware that the success of any plans would hinge on their execution, he has spelt out initiatives to restructure operational management and processes. The Railway Board is to be reorganised along business lines with cross-functional teams focussed on areas such as non-fare revenues, speed enhancement and information technology. Seven missions to set horizon-based agendas have been proposed. While the objectives appear achievable, Mr. Prabhu’s challenge will be to bring them to fruition, especially because many potential partners, including cash-strapped State governments, may be hard-pressed to find the money.
