Railway Minister Suresh Prabhu must be commended for being candid about the “two headwinds” being faced by the transport behemoth that are badly impacting its finances and ability to be a growth driver for the economy. The Indian Railways’ (IR’s) gross traffic receipts for the current fiscal are slated to fall short of the budgeted target of Rs 1,83,578 crore by Rs 15,744 crore, with the ongoing slowdown hurting both goods as well as passenger earnings. Even worse is the projected increase of roughly Rs 28,600 crore in staff costs and pension outgo in 2016-17, mainly courtesy implementation of the Seventh Pay Commission recommendations. The two together have undermined the internal resource position of the IR just when its investments are desperately required to kick start a far-from-buoyant economy.
Viewed against these pressures, it is understandable that Prabhu’s rail budget doesn’t seem to have much to offer. While proposing a Plan size of Rs 1,21,000 crore for 2016-17, a large part of the money for this appears to rely on “extra budgetary resources” — investments through special purpose vehicles/ joint ventures that would attract financing from foreign pension funds, insurance companies and other extraneous sources. The IR’s own works expenditure for 2015-16 amounted to Rs 60,884 crore, which itself fell below the original budget estimate of Rs 76,575 crore. For the coming fiscal, this figure is placed at Rs 78,660 crore, which again may be difficult to meet in the current challenging scenario. Prabhu is counting on cost savings from lower diesel prices and increased adoption of electric traction alongside entering into long-term agreements for procuring power directly at competitive rates. It is doubtful, though, if these can fully compensate for the pressure on revenues and additional outgo due to the pay commission shock.
But even within these compulsions of having to run a tight ship, Prabhu has done well to focus on a few big-ticket projects that can be potentially game-changing both for the IR and the wider economy. Among them is the Dedicated Freight Corridor (DFC) that can radically slash transit time for goods. Thankfully, much of the land acquisition for the Delhi-Mumbai and Delhi-Kolkata corridors is already over. Prabhu has promised that almost all the civil engineering contracts would be awarded before this fiscal ends and both corridors would be commissioned by 2019. Shifting freight traffic from existing tracks to the new corridors would release capacities, helping increase speeds of passenger trains, too, on these trunk routes. The rail budget has further proposed new DFCs connecting Delhi-Chennai, Kharagpur-Mumbai and Kharagpur-Vijayawada. If all these materialise, they would be the biggest thing to have happened since the National Highways Development Project that truly changed the face of India.