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Getting railways on track

Ahead of the Railway budget, the Government has decided to hike the rail prices-of both passengers and goods traffic; the former will go up by 14.2% and the later by a more modest 6.5%. Having taken a relatively hard decision, there was no need for the Government to be apologetic, given the numbers it has in the Parliament. First, it was sought to be explained that the present Government has only decided to ‘implement’ the decision taken by the previous Government. And then it decided to roll back the suburban hike in rail fares, sending signals that it would not be averse to toeing populist line especially when the state of Maharashtra is heading for assembly polls!
The whole exercise of rationalisation of fares would have given an additional income of Rs 8,000 crore for the full year. Now that there has been a partial roll back, even this small addition will not accrue to Railways in full. The fund balance or the reserves with Railways at the beginning of this year is also a similar sum of Rs 8,000 crore. Railways need huge funds for three major reasons. One, for modernization; this includes introducing bullet trains between metros and urban centers and reducing the cost of carrying goods.
Second, expansion of railway network to serve the continental size of our nation. As an iconic national carrier, Railways have an unenviable task of catering to huge increasing demand both from passengers and transporters.
Third, safety standards need a leg-up; sheer numbers of accidents and loss of precious lives underscores this point. Safety also happens to be the most neglected aspect in the functioning of the
behemoth.
All these are capital expenditures which will have to be recovered only in the long run. In addition, Railways do incur revenue expenditure for day-to-day functioning. On capital front, Railways spend no more than $10 billion; compare this with China which has been spending continuously for over a decade anything between $90 to 100 billion per annum! Indian Railways need funding in their own right; in addition, investment in building rail infrastructure will help immensely kick start the sluggish economy. This is precisely how China was able to ward off recession and slow down in the economy.
In the recent past, the portfolio of Ministry of Railways has gone to one or the other regional political parties. Even otherwise, politicians have used Railways to meet partisan, in fact, at times personal ends. Instead of running like a commercial enterprise, Railways have been used to sub-serve vested interests. In the bargain considerations such as financial health, efficiency and safety have been grossly ignored. In order to appease the commuters, passengers fares are subsidized with the help of relatively higher freight rates. As a result, Railways have lost out in competition with road
ways.
As a result, the larger economy is adversely hit. Worldwide Railways are known to be economical and efficient movers of goods. In India barring the low value bulk items carrying over long distances, Railways have proved to be anything but efficient! Just to give a perspective, Railways lose over Rs 30,000 crore every year on passenger traffic; yet, the issue of rising fares is thought of as being very sensitive. By another estimate, just to break even, the second class sleeper fares need to go up by a massive 400%. This state of affair is because fares have not been hiked for decades and the input and operational costs have been
rising.
Finally, ushering in reforms in Railways can help reduce oil imports in to the economy. Modernizing signaling and reducing travel time for cargo movement can attract transporters. Gaining market share from road ways by Railways will help reduce fuel costs. Further, our coal mines operate sub-optimally because of lack of efficient network of Railways connecting deep hinterlands of this vast nation. Coal, especially the low grade variety, is extensively used in producing thermal electricity in the country and the nation as a whole suffers from energy scarcity.  Whichever way you look at it, Railway reforms are highly beneficial to both Indian Railways and the nation’s economy.

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