A fair beginning

Railways get businesslike, partly

After a period of almost unalloyed bad news from the Indian Railways, the new minister for railways, D V Sadananda Gowda, has delivered a mixture of good and bad news in his Budget for the current year (2014-15). The bad news is that the performance of the Railways in the last year (2013-14) was just as poor as feared. Last year’s revised estimates put the operating ratio – that is, operating costs as a percentage of revenue – at 90.8 per cent, three percentage points worse than the figure projected in the Budget estimates. The actuals for last year now show that the operating ratio had deteriorated further. But the good news is that Mr Gowda has projected an image of not being “populist” and declared an intention of “setting things in order”. He has declared a virtual moratorium on new projects, emphasising instead his intention to complete projects already on hand — in particular, 30 such projects that he described as “strategic”. The fare and freight rate hikes announced last month will bring in an additional Rs 8,000 crore. That might help cover costs; the decision to periodically revise fares and freight rates to compensate for fuel price rise should prevent things from sliding back again. If all goes well – that is, revenue projections made on the assumption of an economic recovery are borne out – then it should be possible to stick to expenditure plans and not have to cut Plan expenditure. An 11 per cent rise has been projected in the Plan outlay from budgetary sources — earmarked mainly for safety-related projects.

But despite these noble declarations of intent, Mr Gowda has not really been able to avoid succumbing to pressure. He announced as many as 48 new trains (not counting the ones to accommodate seasonal rush), when this should have been an absolute no-no. It is also very disappointing that he has pegged the allocation to the all-important depreciation reserve fund (used to replace tracks that have passed their use-by date) at Rs 6,850 crore. This, though higher than in the last year, is actually much lower than the amount originally allocated in the Budget estimates for 2013-14. Falling behind on track renewal is dangerous, as worn-out tracks giving way is a significant cause of accidents. Mr Gowda was also under probation regarding how much he would fall prey to his own party’s brand of populism — bringing in super-fast trains, and setting up a high-speed “diamond quadrilateral”. The economics of the latter in particular needs to be spelt out; it is a relief that only Rs 100 crore has been earmarked to pursue the project. While many high-profile attempts to make the Railways more user-friendly have also been declared, a large number of them relies on public-private partnerships (PPPs). The degree to which such PPPs can be managed properly by a capacity-strained Railways organisation is questionable.

In fact, the cardinal need of the hour for the railways is twofold: to get a handle on safety, so as to put behind itself the spate of accidents that have taken place lately, and to undertake substantial reorganisation at the top to improve efficiencies and morale. On reorganisation, Mr Gowda has listed two measures. At the board level, policymaking and implementation functions will be separated. To better monitor and execute projects, there will be a board-level project management group, and at the ground level a device for project monitoring and coordination, which will include state government representatives. This is not a bad beginning.