Finally a pragmatic, not populist, rail Budget
The big takeaway from the Railway Budget that Union Minister for Railways DV Sadananda Gowda presented in Parliament on Tuesday is the massive role that the private sector and public-private partnerships will play in turning around the white elephant that Indian Railways has become. The roadmap will get sharper once the Cabinet stamps its approval to foreign direct investment in nearly all areas of railway functioning except train operations. The Minister had little options before him to raise funds for the many projects that have been floundering for years due to paucity of money, and to finance the other several ambitious schemes which he has unveiled in the Budget. There is a limit to how much can be raised through hikes in passenger and freight fares; the recent raise in fares in the two categories is expected to generate around Rs8,000 crore. The involvement of private players either in the form of direct funding or through partnership with the Government is the only way out. Since the Government has proposed the highest ever plan outlay, at Rs65,455 crore, for 2014-15, it is obvious that the Railways Minister is confident of raising the money. At the very least, he needs the amount to turn around the loss-making organisation. The loss per passenger per kilometre has nearly doubled — from 10 paise in 2000-01 to 23 paise in 2012-13. While there are a number of reasons for this, the primary cause is the failure of preceding regimes to take hard decisions when they were required to be taken. Surplus revenues have consistently declined, leaving Indian Railways with very little resources to carry out even the development works that are in the pipeline, let alone undertake new projects. The Minister has pointed out that nearly five lakh crore rupees are needed to cater to the ongoing projects alone, and that for every rupee that Indian Railways earns, only six paise is left to re-invest.
But for private investments to flow, not only is a transparent policy needed but the Government also has to walk the talk in fiscal management. Bearing this in mind, Indian Railways has decided to scale down its market borrowings to Rs11,790 crore. This should result in considerable savings since the cost of market borrowings is never cheap.
The Minister has not just announced a number of projects but also allocated considerable money to many of them — and that money will have to come through the private or the PPP route. For instance, he has proposed a 54 per cent increase for 23 ongoing projects in the North-East, and 40 per cent more funds for the cleanliness sector. He has set aside a sum of Rs100 crore to initiate the Diamond Quadrilateral project — modelled on the lines of the Golden Quadrilateral of National Highways that the Atal Bihari Vajpayee regime had conceived and begun work on — to connect major Indian cities by high speed trains. This initial amount is set to multiply manifold once the project begins to take shape and later when it is ready for execution.Then there is Prime Minister Narendra Modi's pet project — the bullet train. Mr Gowda announced that the first such train will operate between Mumbai and Ahmedabad. Critics may say this is a pipedream, but it can be a reality if the Government manages the affairs of the railways prudently. Those carping about the greater role the private sector will get to play have no solution on how to fund the massive improvements in rail safety, modernisation of tracks and signalling systems, value-added services for passengers, enhancement in the quality of coach comforts and catering services, operation of special trains to promote nature and religion-based tourism, improvement in freight services etc. Indian Railways is broke. This is its chance to break the shackles.