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Expectations were high that the NDA government’s first rail budget would offer a definitive statement on the way forward for the Indian Railways, given the overwhelming majority of the BJP in the Lok Sabha and with the railway portfolio in the charge of a member of the largest party of the ruling coalition, instead of an ally. Railway Minister D.V. Sadananda Gowda’s budget may not make the grade but it comes across as a pragmatic policy statement considering the deep financial mess the railways is in. Of course, the toughest decision — the 14 per cent hike in passenger fares and 7 per cent increase in freight rates — had been announced days ahead of the budget.
A thrust on passenger amenities, including a much-needed 40 per cent increase in the outlay on cleanliness and sanitation, alongside steps to boost freight performance, deploy technology and improve operational efficiency, is welcome. Populist announcements of new route lines and trains have been restricted to a three-page annexure in Gowda’s budget, sharply lower than the 10 pages in Pawan Bansal’s budget and the 24 pages in Dinesh Trivedi’s rail budget. This is a welcome break from the past — of the 99 new line projects worth Rs 60,000 crore sanctioned in the last 10 years, only one project has been completed till date. The budget pins hopes on increased participation from private players in station modernisation and foreign direct investment in building rail infrastructure. But the most ambitious announcement is on inaugurating bullet trains in the Mumbai-Ahmedabad sector, and a plan to have high-speed rail connecting major metros, starting with nine trunk routes.
What is missing is a plan to monetise the railways’ vast land parcels for revenue augmentation and a broad direction for the corporatisation of the Indian Railways. Incremental revenue mobilisation is crucial in light of the railways’ performance in the last financial year, which was dented by higher working expenses and lower passenger volumes, resulting in an operating ratio of 93.5 per cent for 2013-14 — a clear sign of deteriorating financial health. The operating ratio is expected to be marginally better at 92.5 per cent this fiscal. Overall, in its generally pragmatic bent, Gowda’s budget may have set the tone for the Union budget two days from now, which could also be expected to initiate the spadework for getting the economy back on track.