A few steps taken in the right direction

The performance of Indian Railways has been declining in the past few years with the operating ratio, which was 92.3 per cent in 2010-11, reaching alarming levels of 95 per cent in 2011-12. Thus, this Railway Budget had a historical opportunity to take some radical measures, which has been probably foregone. The Budget sets an ambitious target of improving the operating ratio to 84.9 per cent in 2012-13, but how this is going to be achieved is not clear.

To be fair, the minister has tried to push some reformist agendas. The decision to increase passenger fares, howsoever minuscule, is a step in the right direction.

Much impetus for the Budget has come from the reports of the Sam Pitroda Committee and the Kakodkar Safety Review Committee. The Sam Pitroda Committee had envisaged close to 27 per cent of the funds for the 12th Plan would be sourced through public private partnership (PPP) financing. Even the minister admitted that over Rs 1 lakh crore worth of projects are delayed due to non-availability of funds. A clear articulation on pursuing PPP in such a situation would have been welcome. Hopefully, the creation of various entities like a body for modernisation of stations, an entity for high-speed rail, etc, and creating a position of member PPP in the Railway Board, could pave the way for increased PPP.

One of the major steps in this Budget is initiating the debate on setting up of a separate railway tariff authority. However, this move should not get lost in bureaucratic rigmarole, and the outcome of this debate should be time-bound and implemented expeditiously. Overall, the Railway Budget has been cautious. Some of the proposed initiatives can be harbingers of a shift in railway’s approach, but much will depend on implementation.

 

Manish R Sharma
Executive Director - Transport & Logistics PwC, India