Updated: July 1, 2016 8:34:27 am
A panel headed by Bibek Debroy, a member of Niti Aayog, has suggested that the practice of a separate railway budget be discarded. This remedy is worse than the disease.
The step is expected to help depoliticise the Railways. But Suresh Prabhu, the railway minister, is already refusing to announce new lines and new trains for political reasons and has introduced transparency in tendering. Next, it is argued that it would help the government to take decisions without losing track of commercial viability. If that is the intent, the Railways needs to tackle other issues.
For instance, the unions, entrenched in a corrupt relationship with bureaucrats, will never allow reducing the staff cost from the current 53 per cent of the revenue to at least 40 per cent when 10 to 20 per cent is the norm and commercial viability threshold in railways elsewhere. The bureaucracy, which has made Railways their own fief with absolute freedom from accountability, will not allow any change in status quo. In fact, they would try to expand the fief solely to serve their interests. As the Debroy report reveals, when nine zones became 17, efficiency only decreased.
There is nothing to show that customer service would improve if the Railways became a part of the government. If the budgets are merged, the Railways would move even further into the government, instead of moving further away from the government.
A better option is, perhaps, to allow zones to become corporations. Let manufacturing units compete with private players. Let the zones follow standard commercial accounting practices and lure investments. The rail budget will then become irrelevant and wither away.
It is also suggested that merging the rail budget with the Union budget will facilitate account reforms. Several committees, from Sarin (1985) to Debroy (2015) have recommended accounting reforms to enable easy understand of the true financial state of the organisation. The power of the railway bureaucracy can be measured by the fact that till today they have stalled all efforts at reform. Prabhu promised zero-based budgeting in this year. Has it happened? The railway board needs to be overhauled and experts must replace employees as members.
This merger of budgets can be done only at the cost of transparency and accountability. Former railway minister Sadananda Gowda, in his budget speech of 2014, said out of 676 projects in 30 years, only 327 were completed. After spending the original estimate Rs 1,57,883 crore, now the Railways needed Rs 1,82,000 crore to complete the rest. Only one out of 99 new lines sanctioned in the last 10 years has been completed. This kind of shocking revelation is unlikely to be made about the Railways in the general budget.
The Indian Railways carries 822 crore passengers in a year (2014-15). There are expectations and curiosity about the way it is run. The annual revenue of the Railways is projected to be Rs 1, 84, 820 crore. Few state have such large budgets. The organisation, clearly, needs special attention.
It may be worthwhile to recall why the railway budget was separated from the general budget in the first place. The Acworth Committee in 1921 wanted the railways to be run as a commercial organisation on sound business principles. Then, it would meet its needs from its own income, from outside the general revenues of the country. Three other committees endorsed the intent. Japan separated its railway budget from the central budget in 1919. A legislative assembly committee on September 20, 1924, passed a resolution separating the railway budget from the general budget. The government accepted it and the convention of 1924
came into force. It recognised the Railways as being free to look after their own affairs and to function on “sound business principle” as a commercial undertaking, besides being a public utility.
This must continue. Merging the budgets and making it a mere department of the government would take us back by a century to pre-1924 days.
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