Faster, richer, farther

The line separating Lalu Prasad Yadav’s dreams from Railways’ fruition is politically thick. With a remarkable turnaround behind him, and one that is showing no sign of abating, the minister is firing on all engines. This year’s cash surplus (that is, dividend-unadjusted profits) is expected to cross Rs 25,000 crore, making the Railways India’s largest profit maker. The key that has unlocked the potential of Railways can be compressed into four words: low per unit cost. This strategy has allowed Lalu to lower costs, both passenger and freight, and make money from volumes. In this year’s Rail Budget, he is at it again, lowering freight rates, however marginal (and often reversible) they may be, as well as passenger fares, adjusted for inflation. In possibly his last budget, in a year that holds important state elections, we see a smarter politician behind a smart turnaround artist.

But Lalu’s bigger statement in this budget is the clear focus on public-private partnerships (PPPs), on a scale that would make investment bankers drool. Of the Rs 250,000 crore investment in the 11th Plan, Lalu hopes to attract Rs 100,000 crore through PPPs. Inspired perhaps by the privatisation of airports at Delhi, Mumbai, Bangalore, Hyderabad and Kochi, Railways hopes to provide world-class facilities at railway stations of New Delhi, Mumbai, Patna and Secunderabad, through global competitive bidding. Private entrepreneurs would also be invited for PPPs in setting up diesel and electric locomotives and rail coach factories. The Rail Land Development Authority, an organisation we thought had turned defunct, would raise Rs 4,000 crore by making commercial use of Railways land. All told, 25 per cent of the Rs 100,000 crore PPPs would happen in 2008-09. And hopefully, as Lalu informed Parliament, work on Eastern and Western freight corridors should begin. Meanwhile, Indian Railways Finance Corporation is expected to raise Rs 6,907 crore from the market to part-finance the plan outlay of the Railways in 2008-09; beyond the budget, the RITES IPO is likely to hit the market this year.

This is welcome. The fact is that the 150-year-old infrastructure of Indian Railways is bursting at the seams. New lines need to be laid, high-speed trains that move at tomorrow’s speeds of 320 kmph not today’s 60-70 kmph need to be introduced. In other words, the Rs 72,755 crore rail transport monopoly that’s beginning to move fast, serving and riding a fast growing economy, needs to look beyond productivity jumps and see how it can be a mass transporter of the 21st century. While major political scheming in the form of minor concessions to elderly, women, servicemen, students, coolies and gangmen may create and strengthen constituencies, it is infrastructure development at a furious pace that will finally deliver the economic goods. Having said that, all this should be readily gleaned from a statement of accounts of Railways. Presentation of a budget for the sector with due parliamentary fanfare is just too archaic a tradition.