Intent is good, now it's time for action

We saw three clear segments to the railway budget speech. During the first part, we heard an incisive commentary on the steady deterioration in the financial performance of the Indian Railways, due to flawed policies in the past 30 years. There were brutally honest confessions that the Railways, as an institution, has chronically over-promised and under-performed, has not struck the right balance between commercial and social viability and rapidly losing its ability to generate surplus to meet its operating needs, not to speak of investing needs.

The second part of the speech targeted the passenger constituency, through service orientation as a clear theme. Having effected steep fare hikes last month, the government reached out to the masses by outlining measures for improved access, choice and accountability in providing passenger conveniences. The link between increased fares and improved services was never explicitly made, but implied in the intelligent articulation of several passenger-oriented measures.

The third and the most important piece - the road map for the future - was the most understated. There were several hints of movements in the right directions on private investment, administrative reforms, project management, procurement efficiency, IR-State coordination and commercialisation strategies - without being too specific. The details might perhaps be too boring and politically risky in a maiden Budget speech. But, it is to be remembered that it is not for want of intention that past measures on similar lines have failed. The Railways has experimented with several PPP frameworks in the past and there has been a dedicated land development authority for the last eight years - with scarcely anything to show for themselves.

At the end of the day, it might not be possible,nor terribly important, to detail out a radical plan when it comes to reforming a mammoth running organisation like the Indian Railways. However, it is important to carry through identified initiatives with good institutional support, implementation frameworks and political will power. All of this happens in real time, outside the Budget speech - and investors would be wise to perhaps hold their judgment till we see the action unfolding in the coming months.

Manish R Sharma
Executive director, capital projects & infrastructure, PwC India