Railway Budget: Safety and network expansion remain unaddressed

There is little financial support that the railway minister can allocate especially during election year when his priorities lie in setting up manufacturing units in select constituencies

The state of railway can be summed up from the fact that while Railway Minister Pawan Kumar Bansal was reading out his speech and stressing on rail safety, a train in Gulabganj, Madhya Pradesh, ran over two kids resulting in the crowd setting the station on fire. The lack of safety and inadequate network have been the bane the railways for some year now.

The Railway Budget 2013-14 attempts to address these issues, at least verbally and through long-term plans. The urgency of addressing the problems seems to be missing in the Budget, partly because there is little in terms of financial support that the minister can provide, especially during election year, when his priorities are in setting up manufacturing units and workshops in select constituencies.

Here are the key highlights and impact of the Budget:

Operating ratio reduced from 94.9 per cent in 2011-12 to 88.8 per cent in 2012-13
Though the fall might seem sharp, the ministry had budgeted for an operating ratio of 84.9 per cent, in other words it has fallen short of its own estimates.

No hike in passenger fare

 

  This was already done in January 2013 before the Budget. Though prices have not been increased, charges have been. The minister increased Tatkal charges, reservation fee for AC First and Executive class and an all round increase in cancellation charges. Populism has already cost the Railways Rs 25,803 crore in losses.

Freight rate hiked
Freight rates have been hiked by an average of 5.8 per cent across the board, with scope for further increase going forward as they have a ‘Fuel Adjustment Component’. This measure will have an inflationary effect across the economy and since oil companies are likely to increase diesel prices by Rs 0.50 every month, an upward revision of tariff will keep logistics costs high for corporate India.

Safety a focus area
The urgency in implementation seem to be missing. The minister has talked of making a safety plan for a ten-year period and elimination 10,797 level crossings over the next five years.

No supplementary demand from the government
The poor financial position of the government is more to blame rather than financial prudence. The fact that the Railways had not issued orders for wagons from private sector as budgeted in the previous Budget highlights the fact that the ministry has sacrificed growth. This Gross Traffic Receipts fell short by Rs 6,872 crore to Rs 1,25,680 crore. Lower freight loading at 1007 mn tonne as against an expected 1025 mn tonne was the reason for the shortfall.

At a time when the coal sector is facing severe shortage of wagons, the railway minster’s strategy of setting up new plants in select constituencies rather than taking advantage of unutilised facility in the private sector reflects poorly on the ministry. Much needed funds for growth and modernisation will continue to remain short.

152,000 vacancies to be filled
With existing employee strength of 1.4 million employees, Railways are set to add 10 per cent of the employee strength in a single year. Employee cost and pensions account for 53 per cent of Railways’ costs, which will increase further going forward, thus impacting all future plans of growth, safety, fiscal prudence and consolidation, which were the pillars of this year’s Budget.

That the railway infrastructure is creaking can be judged from a single fact: since 1950-51 only 20 per cent additional railway tracks have been added, but the tonnage hauled has increased nearly 15 times and passenger traffic has gone up by over 10 times. Another opportunity to modernise the Railways has been lost.