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| Too good to last |
| Business Standard / New Delhi Jul 06, 2009, 00:50 IST |
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The railways are back in depressingly familiar terrain
If Lalu Prasad had a Shakespearean bent, he might have been tempted to recall Mark Anthony’s funeral speech for Julius Caesar (“The evil that men do lives after them, the good is oft interred with their bones”) as he listened to his successor present the Railway Budget for 2009-10. Over the course of his five-year term, Mr Prasad received enormous praise for taking the system from virtual bankruptcy to a considerable degree of financial stability. Of course, there were many things remaining as far as investment in capacity and safety was concerned, not to mention the quality of services; but the steady decline in the operating ratio (or, equivalently, increase in operating margins) was on its way to providing the railways the financial cushion to begin addressing these as well. The slowdown during 2008-09 put some hurdles in the way, though. When Mr Prasad presented the Interim Budget in February, the operating ratio was 89.9, up dramatically from the 75.9 achieved in 2007-08. In presenting the regular Budget for the current year, Mamata Banerjee has taken this critical parameter to 92.5. This means that the system is spending 92.5 per cent of its earnings on operating expenses, leaving it virtually nothing to make increasingly critical investments.
The tradition of using the Railway Budget to announce a slew of new trains and grandiose projects to upgrade stations may have become a time-honoured one, but it is something the country can ill afford. As the working population increases at an unprecedented rate, more and more people are moving around the country in search of employment. As industrial output grows, the movement of raw materials and finished goods also continues to increase. It is inconceivable that the railways can continue to service the incremental demand for transport services without significant increases in capacity. The proposals for new trains in the Budget, as also the ones before, are made with little concern for the enormous burden being placed on safety. With bridges and tracks in a state of disrepair, stations unable to cope with the rush and the persistence of archaic technology, the system is simply not up to contemporary standards. Ms Banerjee might have scored brownie points by not tampering with fares and freight charges but, in the absence of a concrete plan to find resources to finance the required investments, this signals further deterioration of the system. With the government emphasising the role of private, including foreign, investment in infrastructure, the focus has to be on overall financial viability, supported where necessary by transparent subsidies. It would be a real loss if the railways were exempted from moving in this overall direction simply for purposes of political accommodation. Between now and the next Budget, some serious thinking has to go into getting the finances of the system back on track and creating opportunities for outside investment in areas where this is desperately needed.
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