Leveraging The Performance Of The Indian Railways...

Leveraging The Performance Of The Indian Railways To Serve Progress

The maiden budget tabled this 8^th of July by a smiling but most earnest Railway Minister Sadanand Gowda, the first BJP minister to do so ever, was a dramatic, comprehensive and visionary curtain-raiser of the Modi Government’s policies.

Most NDA voters, constituting over half the electorate in several of the Union’s 29 states, with a decisive national average of 31%, were probably much relieved. This BJP/NDA voter needs to be contrasted with the decimated Congress’  sad 19.3% statistic, despite their continued efforts to project themselves as principal representatives of the poor.

The BJP voter quickly realised that they have not been let-down by the new Government in its first major statement of policy. There is to be no dilution, diminishment of pace, or damp-squib disappointment with rhetorical campaign pledges. Modi had promised a bold, transformative and pioneering approach to modernisation, development and governance on the stump, and here, indeed, was proof of intent.

Populism, it is seen, has been redefined into a better product. The Railways will be cleaner, the food better, more secure for women and from Maoist bandits, there will be internet connectivity and a cornucopia of amenities and choices at the stations, actually these will be upgraded beyond recognition, solar power will be extensively introduced, all railway land will be properly mapped digitally, modern state of the art coaches will be introduced, and so on.

On the fiscal side, the Railways will go some way towards paying its own way operationally, with tariffs linked to fuel prices in future.  Massive PPP and FDI investment will be invited for the ambitious modernisation plans, including the first stages of the Diamond Quadrilateral and the freight corridors. The Indian Railways will retire debt and borrow less, while improving governance to cut away masses of wasteful practices.

The particulars of this budget are new in almost every paragraph, its emphasis on completing projects, creating tourist and pilgrim routes, the closure of thousands of unmanned crossings that lead to accidents, airline-style vacuum toilets, faster trains on existing tracks, a general emphasis on  operational   efficiency  and getting more out of the massive asset base, electronic surveillance, easier online ticketing etc. indicate a comprehensive approach, as opposed to what the Prime Minister called ‘ad hoc’.

And overall, this giant undertaking run by the Government, its Ministry, its Railway Board, its lakhs of employees, is going to be spliced with a lot of corporate DNA for the first time. The Indian Railways, the biggest public sector enterprise, mired and wallowing thus far in third-world squalor, dying on its feet in the name of social obligation, is to be recast into its rejuvenated, productive and profitable avatar.  

The investors in the stock market, both domestic and foreign, clear about the route map now, decided to cash-in some profit from all the sectors and counters which have run up very fast of late,  no doubt before the market indices start climbing again. The Sensex fell 517 points after weeks, but not because investors were disappointed with the Railway Budget. This, even as all the companies associated with manufacturing items or providing services to the Indian Railways expressed their happiness and satisfaction with the budget proposals.

 The main budget, coming on the 10^th, will undoubtedly also be of a piece. And as if to indicate as much, there were two reformist and far-seeing off-budget announcements on the 8^th as well. One was with regard to a firming up of 49% FDI, to be allowed in Defence-oriented manufacturing in India, permissible by the FIPB route; and more, up to a full 100%, by sanction of the Cabinet on a case to case basis.  The other was a bold liberalisation in the repayment terms of Infrastructure loans, from a difficult 10 year maximum, to a more realistic and attractive ‘life-cycle’ period of 25 years. 

These initiatives have been taken, as if to bracket, enable and accompany the path-breaking Railway Budget. Most commentators are gob-smacked by the reach and ambition of this budget, and are asking if it can be implemented in equal measure. Expert opinion however, sees no reason why not, given Narendra Modi’s gift for good governance. Conversely, the Opposition Congress were thrown into a paroxysm of despair at such an awe-inspiring opening gambit, a railway budget like none other in the 67 years of  independent India’s history.

The Prime Minister himself was quick to make a statement to the people on DD, immediately after Gowda’s presentation. He said, in effect, that the policy framework had to be reworked to bring out the potential of the Indian Railways as a key hand-maiden to the country’s economic development.

Indeed, it is now clear that this Government is the worthy successor to take forward the bold reforms initiated in 1991, but sadly never really built upon since. Then, the GDP was just 1.1 % and there was a paltry $5.8 billion in foreign exchange reserves. So reform in 1991 came about as an imperative to the country’s very economic survival, after decades of unproductive socialism.  

And today, again, some elements in the fractured Opposition, are raising various  populism- inspired bogeys against the proposed FDI and private-public partnership model, mooted to finance the expansion and modernisation. But now, it is good to remember that the USSR, the much emulated socialist mentor of our early years, also disintegrated and vanished, as it happens, in 1991.

(892 words)

July 8^th, 2014

Gautam Mukherjee