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Expansion and consolidation

Suresh Prabhu has produced a Rail Budget for the 2015-16 fiscal that seeks to augment the role railways plays in the nation’s growth story for the foreseeable future. In a welcome change from previous Rail Budgets, Prabhu has neither announced new trains nor new lines, besides maintaining status quo on current passenger fares. The focus was entirely on upgrading existing infrastructure. Prabhu’s presentation of the Rail Budget in both Houses of Parliament laid emphasis on increasing the carrier’s capacity for ferrying both goods and passengers through gauge and track changes, raising the number of lines on key routes, faster train speeds and expanding the process of electrification, among others.

On the demand side, meanwhile, Prabhu has sought to augment the quality of service. Therefore the Rail Budget, experts suggest, has the potential to transform a major carrier of goods and passengers. For far too long, the carrier has suffered from poor management and gross corruption. On the operational side, Prabhu has sought to focus on greater transparency and efficiency.

This focus has, therefore, pushed the consumer to the forefront. Basic economic theory and facts on the ground suggest that rail transport has lost to out roadways because of poor and inefficient service delivery. This aspect is fundamental to raising fares in future, since consumers will not pay for inadequate service. The focus on the consumer is clear from Prabhu’s bid to introduce better food from an array of choices through the IRCTC website at the time of booking tickets, vacuum toilets, more coaches per train and mobile phone charging facilities in general and sleeper class coaches, among others.

In a carrier that has suffered from chronic under investment, the Rail Budget has envisaged an injection of Rs 8.5 trillion over the next five years. The minister argued that if this sum is spent on improving the existing railway infrastructure, it could have a multiplier effect on everything from the fortunes of heavy industry to India’s ability to attract foreign direct investment. Resources for this sort of investment will be generated from the general budget, and borrowings from pension funds and insurance companies, which have expressed a longer-term interest in the matter, besides market borrowings from other sources.

Prabhu made it amply clear in his Budget speech that he will not go with a begging bowl to the Finance Ministry for more funds. There are, however, numerous challenges that remain. Executing these policies will be one of them, since experts have suggested that Prabhu’s revenue estimates are unrealistic. In the current fiscal, passenger and freight revenue receipts had to be slashed and gross traffic receipts fell by a hefty Rs 917 crore in revised Budget estimates. To, therefore, generate and spend Rs 8.5 trillion, the Centre will have to build up the requisite structures. This task, many argue, will be a very daunting one.
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