Millennium Post

Low on investment, high on promises

The Railways, a prime mover of India’s economy, are in bad times. Going by all key operational parameters such as handling of freight earning cargo volume, passenger numbers, status of technology, safety and security, quality of service, investment in modernisation of tracks, rolling stock, locomotives, signaling and safety equipment, and passenger comfort, the performance of Indian Railways during 2012-2013 has been among the worst in memory. It is estimated to incur a loss of around Rs 24,000 crore during this fiscal. The railways failed miserably in achieving the current fiscal’s performance projections. Last November, the railways’ freight revenue grew by only 0.8 per cent. As the rest of the sector of industry and economy, the railways too have been a victim of policy paralysis, especially under the UPA II, lack of constructive approach and direction, and whim-whams of the department’s political masters for almost 24 years since the exit of Madhavrao Scindia as railway minister in 1989.

Railway Minister Pawan Kumar Bansal’s railway budget for 2013-2014, the first by a Congressman in 17 years, too is heavy on political agenda with 100 more passenger trains set to crowd the existing over-loaded tracks mostly through UPA-government states during 2013-2014 having an eye on the coming Lok Sabha polls. The minister had made his political intension clear on Monday itself:  ‘The government is for the people. You will have to see the budget from that point of view.’ Obviously, Bansal, like predecessors Mamata Banerjee and Lalu Prasad Yadav, chose populism over pragmatism and fiscal prudence. The statement depressed the market, the next day. The Sensex shed 150 points ahead of the rail budget.

Since the passenger fares were already hiked by 21 per cent across the board last month to raise additional revenue of over Rs 1,200 crore in the remaining period of the current fiscal and Rs 6,600 crore in 2013-2014, the minister proposed to increase freight tariff by around five per cent by way of ‘fuel surcharge’ on freight. The later, though not totally unexpected, will raise the cost of basic industrial inputs such as coal, iron ore, bauxite, dolomite, lime stone and clinkers, power, steel, cement and non-ferrous metals. New railway equipment projects announced in the budget more on political than economic consideration to please states and ‘select’ parliamentary constituencies will have adverse impact on existing manufacturers of wagons, coaches, etc., in both the public and private sector. The demand-hit industrial sector is upset.

The corporate sector’s disinterest in large ticket railway projects under the private-public-partnership (PPP) model may substantially derail the 12th plan target of Rs 1,00,000-crore investment  target which is deeply linked with the overall economic growth (GDP) projections during the period. Last year, the railways failed to attract any noticeable private investment proposal. Successive years of losses and cut in the allocation from the central budget have led to severe fund shortage to execute even the existing populist projects, leading to time and cost overrun.

It now proposes to borrow Rs 151 billion rupees from markets for the financial year 2013-2014. The country’s railway network, the world’s 4th largest, has suffered from years of low investment and political tyranny resulting in a creaking system plagued by delays, overcrowding and slow freight delivery times and affecting the competitiveness of Asia’s 3rd-largest economy.

As usual, there are promises and projects galore. But, they are mostly are delinked with the experience of past performance and the organisation’s present capability. The largest infrastructure outfit will continue to chug at its own pace on the existing slow tracks, under-equipped and under-funded. The railways need a massive technical and managerial overhaul and a high dose of investment through incremental internal resource generation and borrowing.  

The budget has little focus on technology upgrade. The railways do not have any high-speed rail lines capable of supporting speeds of 200 km/h or more. High-speed corridors have been proposed but not implemented. The railways will once again miss out on investment to upgrade locomotives and coaches, which can support 160 km/h, with stainless steel bodies and crash-worthy designs, incorporating passenger and crew protection, and fire-retardant materials. Such coaches need to be equipped with electro-pneumatic brake systems to enhance safe operations at 160–180 km/h. The railways need to develop locomotives with output of 9,000 to 12,000 hp for hauling of 24-26 coach long passenger trains to 160–200 km/h. The possibility of introduction of high speed (250-350 km/h) trains as started in China and existed in several parts of the world is still a far cry. Incidentally, the proposal to run high-speed trains in India was mooted in the mid-1980s by then Railway Minister Madhavrao Scindia but was later given up for cost reason.

The railways had set up a corporation called HSRC on 25 July 2012 that is to exclusively deal with the proposed ambitious high speed rail corridor projects to be implemented through PPP mode on a design, build, finance, operate and transfer basis. The latest rail budget fails to throw much light on the progress of the project. Again, it could be because of the high investment cost.

The cost for China’s recently completed Wu-Guang HSR line worked out $18 million per km. While the railways have been wasting funds on unviable politically-motivated departmental projects, it has badly failed in adding route-kilometre. (IPA)
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