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Chugging ahead

Rail budget makes many right moves. But beware of rail ministry’s ‘implementation bug’.

Written by Akhileshwar Sahay |
Updated: February 27, 2015 5:50:44 am
Rail Budget 2015, Rail Budget, Suresh Prabhu, Suresh Prabhu rail budget, rail fare, new trains Railways Minister Suresh Prabhu while presenting the Rail Budget 2015 announced four goals to transform the India Railways. (PTI)

Some budgets are called “dream budgets”. Some make you dream. But this first full-year railway budget of the Narendra Modi government simply puts the “bleeding railways back on track”. All credit goes to Railway Minister Suresh Prabhakar Prabhu for not swaying to the populist agenda, for bringing sanity back to this annual exercise and for bringing the long-neglected “railway customer” back on centrestage.

The following bold acts make this budget special. One, by not introducing new trains and not announcing new projects, Prabhu has taken the first baby-step towards reversing the past missteps of his predecessors. Mushrooming announcements of hundreds of new trains in annual rail budgets have choked the network, without commensurate benefit to passengers, and a plethora of past unviable projects on populist considerations have saddled the Indian Railways (IR) with a throw-forward of more than Rs 5 lakh crore worth of non-executable projects. His next step should be to discontinue trains that are not patronised and abolish projects that are not needed, which have not crossed the starting line for decades.

Two, in the past one-and-a-half decades of anchoring of the rail budget on visual media and commenting on it in print, this member of the commentariat finds it refreshing to see a budget with a five-year vision, with four thought-through goals, five cogent guiding principles and 11 thrust areas of action. The challenge before Prabhu now is to ensure that these are translated into concrete action, with measurable results and time-bound execution.

Three, by significantly enhancing budgetary provisions for increasing the capacity of the network, in place of announcing more unviable projects, and by significantly improving passenger amenities, with much greater focus and outlay on enhancing safety, including the elimination of level crossings (notorious killer spots), Prabhu has set his priorities right.

Four, by breaking away from the traditional mould of financing railway plan expenditure through insufficient “internal accruals, gross budgetary support and market borrowing through the IRFC (Indian Railway Finance Corporation Ltd) and non-starter PPPs”, Prabhu has unleashed the power of innovative financing, including partnering with beneficiary states, PSUs, major customers, multilateral and bilateral institutions, annuity, funding from other sources and reliance on equity. The railways’ need of plan funds is exponential, and all sources put together will not suffice. It is in this context that the new financing cell in the Railway Board is a positive step. But the key will be to put the right people, including external resources, in the saddle to fight the devil of finances.

Five, over-centralisation, opaqueness and extensive delay in decision-making, systemic inefficiencies, endemic corruption, departmental silos, and silos within silos have haemorrhaged the railways for a long time. Indeed, the first committee in independent India to investigate corruption, headed by J.B. Kripalani, was set up in the 1950s to reduce the high rent-seeking in IR. Six decades have gone by and not much has changed. This puts in perspective the focus in the budget on a new paradigm of governance, extensive management reforms and transparency across all levels. Recent decentralisation of works and stores tenders to general managers is a welcome first step and is, indeed, pathbreaking. But a lot more is needed. The task before Prabhu is unenviable. Entrenched vested interests can successfully torpedo his reform process essentials unless this intent is doggedly pursued with fast and decisive action. The time has come for the opaque and unwieldy Railway Board to become nimble and shed many of the functions it has usurped over time but which do not, rightfully, belong to it.

Six, the railways accounting system is not in sync with the needs of a commercial organisation. The institution today is unable to know the true cost of the various services being provided by it. In the past, there have been many false hopes of an accounting reform. But the renewed focus on bringing best practices to accounting that fit into the organisational requirement is a welcome step. The caveat is that the astute chartered accountant in Prabhu will need to take this critical reform to its logical end at the earliest.

Seven, the boldest measure in the budget is to break away from the internecine departmental war and give a massive push to railway electrification. It is common knowledge that the country depends on costly fossil fuels (and the present lull in diesel prices should be considered a lull before the storm). But few are aware that 35 per cent of the electrified traction of the IR carries nearly two-thirds of freight traffic and nearly half of passenger traffic at an annual traction cost of around Rs 10,000 crore, while to carry the remaining one-third of freight and half of passenger services on diesel traction, the IR spends nearly Rs 22,000-25,000 crore annually on POL (petroleum, oils and lubricants). This push for electrification has not come not a minute to soon, and will bring substantial financial savings to the institution, duly accounting for the project execution cost.

There are several other small and big factoids and fine points that make this the best railway budget in the last decade and a half. But there are two words of caution for Prabhu — often, “best” becomes the enemy of “good” and “green shoots” often turn into “brown manure”.

And the empire he sits upon is notorious for suffering from the “implementation bug”. For the next 365 days, 24×7, the rail minister will need to pursue minute details of the big picture of his dream budget to make sure that the “dream does not die young”.

The writer is a former IRAS (Indian Railway Accounts Service) officer

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