Rail Budget 2015: Right intent, way forward still unclear
One of the highlights of railway minister Suresh Prabhu's Rail Budget speech, which was peppered with humour, was his invocation of God by punning on his own surname. "Our priority is to improve the capacity in the high density section. But I thought, Hey Prabhu (Oh God), how will it happen?" he said. That sort of summed up the humongous nature of the work at hand, with so little resources at his disposal.
The government will pump in Rs eight lakh crore into the Railways over the next five years. That may not be a big figure when one considers its revenues - Rs 1,39,338 crore in 2013-14, and growing over 10 per cent annually. But the key figure to watch for is the net profit Indian Railways made in the same year - a paltry Rs 602 crore. Just for comparison, another public sector firm, Oil & Natural Gas Corporation had revenues of Rs 90,602 crore in the same fiscal, but its net profit stood at over Rs 22,000 crore. That clearly means the transport behemoth is losing a substantial part of its earnings in operating costs and in subsidising passenger fares, and therefore, is struggling to remain profitable.
Just as many of his predecessors, Prabhu has also proved he has no alibi for the PSU's ills, nor is he keen to announce any big bang reforms that may sound bombastic but will add little value. It is pertinent that he has decided to forego Prime Minister Narendra Modi's pet dream of bullet trains, since he realises it will be an unviable exercise that will drain the exchequer, but rather focus on something as basic as improving the lot of the traveller. So he throws in a smattering of better services such as more bio-toilets, seat reservations for women and the elderly, mobile charging facilities in general compartments, promises of better catering, faster ticket dispensation and so on.
He has also been prudent not to further burden the existing network with more trains without improving the lot of the existing ones, or weigh down the exchequer with any cut in passenger fares. He has, however, taxed the industry by a hike in freight rates for urea, cement, coal and iron & steel. That surely has let the corporate sector down, as it was expecting the government would maintain the rates in view of a fall in diesel prices of late. It is, therefore, not surprising that the stock markets fell, with the BSE Sensex closing over 260 points on Thursday compared to the previous day's close. The higher freight rates also does nothing to improve the ease of doing business in the country, that the government has been talking much about.
Having said this, the real disappointment is that the minister does not seem to have a convincing plan that will indeed turn the railways around. Setting up new railway stations or modernising the existing ones through private public partnership is a good model, but it remains to be seen how many private parties will come forward for this, given the precarious condition of the railways, much emphasised by the minister himself. Privatisation has been ruled out, so Prabhu will stick to raising funds from multi-lateral lenders, infrastructure and pension funds, and from monetising railway assets. How he manages to raise the required the resources will be key to Modi's dream of "transforming" the railways in the next five years.