No fare hike,no freight hike,Didi runs on empty

Railway Minister Mamata Banerjee perhaps scored a point with her vote bank in West Bengal,but left little or no funds for investment in new assets or replacement of old ones.

Railway Minister Mamata Banerjee perhaps scored a point with her vote bank in West Bengal,but left little or no funds for investment in new assets or replacement of old ones. Her inability to either curb expenditure or increase revenues with no increases in passenger fares or freight in the Rail Budget for 2010-11 served only to bring the monopoly closer to bankruptcy. This is best reflected in the operating ratio (amount spent to earn Rs 100) slipping dramatically from a robust 75.94 in 2007-08 to an estimated 92.3 in 2010-11.

Banerjee had no clear strategy to generate funds to fuel her ambitious plan of adding 2,500 km of railways every year in the coming decade as laid out in the Vision 2020 document released two months back. For 2010-11,she has proposed to add 1,021 km and has set aside Rs 4,410 crore. Thats a tall order given that the current expansion is barely 250 km a year.

The Budget for the next fiscal leaves her with a Rs 3,173-crore excess (total receipts minus total expenditure less dividend),more than three times the excess for 2009-10. What is glossed over,however,is the fact that she had budgeted for an excess of Rs 2,642.26 crore in 2009-10,but managed only Rs 951 crore as revealed in the Revised Estimate.

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The huge shortfall in excess this year has meant that Banerjee could not set aside even a rupee for the Rail Capital Fund for expenditure on new assets. At the beginning of the year,she had budgeted for Rs 642 crore towards the Capital Fund. Even the Rail Development Fund had to be pruned by more than half to a meagre Rs 951 crore for the current fiscal compared with Rs 2,000 crore originally estimated.

With no gameplan for raising funds,Banerjee has gambled heavily on the public-private partnership mode for an array of projects. She plans to set up a task force with clear directions to close investment proposals within 100 days. This,however,calls for a huge change in the mindset of the Railways.

She,of course,did hope for a bright future. I assure the Honble Members that better days are ahead for the Indian Railways. Just as highway,telecom,IT… have taken off,the Railway sector will also see exponential growth in the years to come, Banerjee told the Lok Sabha,after a marathon two-hour speech marked with constant interruptions and matching retorts by her.

The Minister explained that the Budget for the current year was formulated in the backdrop of the Sixth Central Pay Commission and slowdown of the economy. In her speech,Banerjee said that her Ministry had to bear the burden of Rs 55,000 crore to implement the Pay Commission recommendations.

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What appears to have saved the day for the Railways is the fact that it will still manage to surpass its freight loading target of 882 million tonnes for this year by at least 8 million tonnes. But it is the growth in the passenger earnings that upset her calculations. Banerjee was candid enough to admit that passenger segment has been below expectations but chose to blame this on adverse weather conditions during winter in the northern part of India and rail rokos and agitations.

That the Railways have clearly run out of ideas in their core area of competence was on full display in todays Rail Budget. While critical operational areas cry for attention,the Railway Minister announced plans to set up six water bottling plants,five sports academies and 10 eco-parks. Her stance,first articulated in her last Rail Budget speech, that social considerations and not just economic viability should be the criteria for railway projects,found an assertive mention today. She read out the entire list of 114 socially desirable projects that have been pending for long.