If Wishes Were Locomotives

The countrys economy moves along railway lines. This becomes clear once we consider the role of this vital infrastructure which is the biggest carrier of core raw materials. Movement by railways of bulk items is highly energy-efficient and saves India millions of dollars in fuel bills. If the railways were to shut down, the energy efficiency of the economy would be severely affected. Further, the additional pollution would sharply hike the country's health bill, especially its financial future. One reason for this may be the lack of understanding and knowledge of the issues involved.

The Indian Railways (IR) are perhaps the only major system in the world still showing a profit, despite the unremunerative services they have to run and despite the recent withdrawal of the bulk of Plan support. This is well-known and much touted. But under this sparkling surface looms an abyss of financial uncertainty.

This collection of essays and articles edited by K B Verma is probably the first book on the subject. The core issues have been brought to the fore and discussed in depth and detail. In analysing railway finance, all major questions have been touched, and by the people who are best to do so. Among the contributors are past and present members of the Railway Board, including past chairmen and financial commissioners, economists, transport consultants and academicians.

Bringing together a group between two covers has its risks though, as the book could become a disparate jumble of ideas and opinions. Mr Verma has been able to maintain a core unity of purpose: sounding a warning bell that if some hard decisions are not taken in the immediate future, the railways could face financial disaster. If that happened, the consequences on the Indian economy would be equally disastrous.

In his introduction, the former chairman of the Railway Fare and Freight Committee, D M Nanjundappa, sets the tone of the book: That IR, which is earning substantial profits even after meeting the so-called full cost, should be suffering for resources for expansion and improvement is a national tragedy. Indeed, resource crunch has become the single greatest factor inhibiting the railways today. The articles discuss the full spectrum of this problem, including sources of railway funding in the past and present, productivity and planning and prioritising resource allocation.

The seven informed essays by Mr Verma, well-written and full of new perspectives, form the backbone of the book. Of special interest is his analysis of the productivity of capital investment identification of areas of cost reduction and his proposal for adopting a modified operating ratio as an index for judging the railway's performance. Among others, A V Pouloses outline of the evolution of financial management in IR, M Q Dalvis case against wholesale privatisation of the railways, Y P Anands perceptive analysis of the real problems of financial management and S Manikutty's identification of some of the major problems besetting IR add to the value of the book.

The arguments in favour of project unigauge by Mr Anand and cogent points against it by M N Prasad is probably the first public debate on the controversial decision to convert metre and narrow gauge railway lines to broad gauge, irrespective of the poor direct returns on such investments.

The growing fear that IR is fast moving into a debt trap on account of market borrowings and injudicious investment decisions has to be confronted head-on if India has to build for the future. Spreading the butter thin does not make sense when common wisdom suggests full resource allocation and early completion of crucial projects. More logical pricing of railway services and effective cost controls cannot be postponed further. This book brings all these and more into focus. It should be compulsory reading for all policy makers of liberalised India, including parliamentarians and bureaucrats of the economic ministries.

Mr Verma's efforts will undoubtedly help in IRs voice being heard where it matters. If only the right decisions on investments and asset utilis-ation, as suggested in the book, are taken, IR can look forward to the next century with rene- wed hope.