Vanishing Budget of Indian Railways

 


Since the discontinuance of a separate Budget in 2017, Indian Railways (IR) and its annual budget have lost significance and spotlight. It has been seen by many as something which was done in view of its size being increasingly smaller vis-à-vis the national Budget and by others as a move which has led to greater budgetary support to railways, further pandering to its financial indiscipline.

 

Well, Budget declarations are important not merely because of the allocation made by the government for various schemes and projects in the coming financial year as well as a review of financial performance of ongoing and coming years, but also because of an affirmation of the policies being followed, or freshly envisaged, by the government in the long term. In the background of the merger with main budget, the budget of the ‘lifeline of the nation’ does not evoke much interest. It may be reduced to four lines in the budget speech of the Finance Minister but railwaymen for life, which I decidedly am, must try to extract some meaning from the numbers and the verbiage, or the lack of it.

 

First the numbers. In budget speech, the government would definitely pat itself on the back vigorously, proclaiming over 25 % YoY rise in revenue. Never mind that a large part of the fiscal 21-22 was a wash-out because of Covid. Many such articles would be published, picked up in toto from the Ministry’s press notes:

 

https://timesofindia.indiatimes.com/india/railways-earnings-jump-28-set-to-cross-budget-target-in-weeks/articleshow/97151926.cms

 

A comparison of earnings and expenditure on three-year CAGR basis, with 2019-20 (a largely non-Covid year but a bad one from performance standpoint) would show that things are less exuberant as they look; the earnings would show 9 to 10% increase whereas the rise in working expenditure would be around 6%. Compare with 2018-19, even a more realistic year, and the CAGR for earnings would be barely over 5% whereas expenditure close to 5%. In an economy growing at the rate of 6 to 7%, one would expect IR’s growth of revenue to be around 13-14%. That is not happening. If we discount the unexpected surge in coal loading starting 2021-end, the picture would be gloomier;  the rise in coal loading may continue to some extent in the next fiscal too but in long term it would not and IR’s performance is not likely to be very delightful. Should we be thankful for small mercies that the gap between the earning and expenditure is increasing and there may not be a need to window dress the Operating ratio? Meanwhile, the Capital expenditure has gone on mounting in spite of lack of internal resources and so manifold increase in EBR (Extra Budgetary Resources), which are external borrowings, apart of the GBS(General Budgetary Support) Sounds like a debt trap but no, why bother, we are the government, right? Unlike all the overextended borrowers, the chickens never come home to roost for the government. So be it, we will talk more about it when the numbers are declared tomorrow, 1st Feb, in Parliament.

 

Banner declarations? The government may make some fresh announcement on Train 18/Vande Bharat trains as the train has indeed become very popular but that would be only a political statement. I see no merit in fresh announcement of Vande Bharat trains as more than 500 have already been announced and only eight are on line as of today; the work of the next four to five years or so is cut out. I would, however, think that upgradation of tracks for 160 kmph operation between Delhi and Mumbai and Delhi and Howrah should be a top priority with massive allotment of funds so this sanctioned work gets completed early, particularly in view of the large-scale proliferation of Vande Bharat trains which are at present not being exploited to their full potential. More sections of the golden quadrilateral or the diagonals should also be earmarked and sanctioned. This should also cover faster installation of Kavach in these sections. I would also expect an announcement that the Sleeper version of Vande Bharat would be designed and delivered in the next financial year as it has been delayed badly; without this version, deployment of Vande Bharat as a replacement of Rajdhani, let alone cloning of a superior train, would not be possible.

 

In respect of rolling stock, I firmly believe that non-AC travel will be totally out of place in developed India by 2040 so manufacture of non-AC passenger coaches should be totally stopped and imaginative action be put in action to make AC travel affordable for the common man of India; it is feasible without significant increase in fare simply by subsidizing the trains for the common man from the earnings of the higher classes of premier trains.

 

An announcement for a 2nd HSR corridor as well another RRTS in NCR area, but largely indigenously-designed and built, will shore up the spirits of the domestic railway industry players.

 

I also expect a more comprehensive actionable plan for the year for IR to gain modal share in freight transportation on one hand as while the revenue performance has been good this year, it needs to be improved such that part of the planned infrastructural expenditure is met from internal resources, reducing extra budgetary support or external borrowings.

 

I would also like to see a firm direction towards completion of many stations in the year as functionally-effective, passenger-friendly, clean, hygienic, modern stations as against the meaningless hype of airport-like stations.

 

Another expectation is to see some positive movement towards corporatization of railway manufacturing units to make them more efficient and competitive; this was announced in  2019 but is lying in cold storage.

 

Some major change in the cultural ethos of the national carrier to treat its porters, Safai Karmacharis and other contractual labourers with empathy leading to more dignity for them? Shedding it feudal culture in letter and spirit both not in lip service alone? It’s futile to even begin to expect anything in this direction.

 

Many of these expectations do cause anxiety and therefore headache in the stakeholders and observers as the four lines of the FM’s Budget speech cannot cover it all. 'Expectation is the root of all heartache' may or may not be a quote by Shakespeare but were he a railwayman for life, I am sure his heart would ache too. But the bard also did speak through Richmond in Richard III that “.. True hope is swift, and flies as fast as a swallow...and I do nurture similar hope.


Comments

  1. The world is moving so fast, we all want progress, Blogs like this will put all of us in the right track towards Progressive thinking. Thanks Mani Saaab.

    ReplyDelete
  2. It is only a few hours before we see the budget. On the Railways, I dont expect much major announcements other than a few more Vande Bharat trains, upgradation of railway stations and some passenger amenities. Let us see.

    ReplyDelete
  3. If India successful starts first HSR line by 2027, how long do you think would the second like take?

    ReplyDelete
    Replies
    1. Well, to my mind, it can be done in five years but needs great synergy and resolve.

      Delete
  4. Absolutely realistic review and analysis of railway budget along with identification of core areas that need to be focusef towards futuristic development of railways which is a backbone of Indian infrastructure. I wish realistic budgets were prepared in consultation with experienced professionals from the industry rather than getting experts to plug in decietful numbers to paint rosy picture of phenominal 25% increase in revenue for not so educated common man. Thank you giving us an insight.

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  5. Mid 50s - WP steam locos had MPS at 105 kmph

    Early 70s - WDM2 hauled Rajdhani at 120 kmph

    Early 2000 - Major trunk routes have MPS at 130 kmph

    What's new? Heavier rails, RCC sleepers, Pandrol clips, Plasser machines.

    Should we expect MPS of 150 kmph on major trunk routes by 2030?

    Hire better civil engineers and get rid of the old stock.

    ReplyDelete
  6. Reg the Vande Bharat train , I am not very clear why the capital cost of a train set is so very high
    Secondly , the fare as fixed for these trains is way above the normal fare one pays for the same distance

    ReplyDelete
    Replies
    1. Services should be improved, travelling time cut down like it did on Delhi-Varanasi route but one must pay higher fare, after all even with this level people are willing to pay for enahnced services

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  7. Yes I too got surprised with one liner on Railway in central budget.Still it does not impact the brand or importance. Further elaboration when pick book available we all will know. For past many decades Railway has been in center of politics, start of new trains , facilities and similar were attracting to public at large and converted to votes but now less politics.

    ReplyDelete

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