Chugging along

The Railways are badly strapped for cash and things are going to get worse before they get better. As the Railway Budget and the status paper before that confirm, a massive injection of funds is required for maintenance and new rolling stock. That is not in sight. The Union Railway Minister has been left to do the best he can within the constraints of limited internal resources, an economic downturn and the perennial political difficulties associated with reducing subsidies. Added to these standard problems are the uncertainties over sanctions and specifically whether the Railways will get a 500 million project loan from the Asian Development Bank after all. Nitish Kumar has done a little better than his predecessors by avoiding the temptation of going for over-ambitious new projects which do not materialise or populist ones which are a drain on the Railways8217; meagre resources. Overall it is a holding operation and in more ways than one.

All things considered, the increase in passenger fares is modest,ranging from one rupee to Rs 450 on various classes. As expected, Kumar has come down harder on those who can afford to pay more, including urban commuters in some cities. This makes sense in two ways: the market can take it and the rich end up subsidising the poor. Many passengers may well consider the hikes quite unjustified without commensurate improvement in travelling conditions. However, this is a continuation of the attempt to rationalise the system of hidden and direct subsidies. Without these and other cost-saving measures the Railways would go downhill more rapidly. There has been no increase in general freight charges, only some changes in the classification of goods and higher charges on baggage and parcels. Here, Kumar is fighting shy of doing what is unavoidable for reasons that are not clear. True, the Railways8217; market share of freight traffic continues to decline. But that has always had as much to do with inefficiencies and delays as price differentials. If the Railways have been able to meetannual freight targets in a sluggish economic year, it suggests there is scope for some increase in freight charges. A mid-year review looks inevitable.

Although the annual plan size which is fixed at Rs 9,500 crore looks promising, budgetary support has risen marginally. That means the Railways will have to work harder than ever to generate resources internally and trawl the market. Working expenses will be lower by Rs 1,800 crore thanks to savings on pension with the retirement age raised from 58 to 60. This single measure has made it possible for Kumar to claim an quot;excessquot; in his accounts. Funds raised in the market last year and the year before fell well short of target. With the bulk of capital expenditure going to projects in the pipeline, expenditure on new rolling stock is minimal. Funds for maintenance, as usual, are in short supply. Small wonder that the Railways are pressing the government for higher budgetary support and for direct government investment in new infrastructure. The government,weighed down with similar pressing demands from all sides, is not in a position to meet any of them adequately. All in all, it is a grim picture.