Prabhu Presents A Reformist Rail Budget 2015

Prabhu Presents A Reformist Rail Budget 2015

The Railway Budget presentation 2015 had a completely new, vigorous and modernist ring to it.It had the Modi stamp of cleanliness, digitization, better design, food and bed linen, revamped stations, high speed trains, incremental gains in user-friendliness for the blind and differently-abled.

There are new helplines, easier ticketing, stress on safety, increased speed of existing trains, better designed passenger wagons, 17,000 more bio-toilets, and vacuum toilets too. The high speed corridors are also firmly on the anvil. Some new coastal tracks of about 1,200 km length will also be added.

But Rail Minister Prabhu confidently spoke of nothing less than transforming the Indian Railways over the next five years.

The Opposition, including several former Rail Ministers seemed a little jealous even as they were clearly miffed with the newness of it all. To cover up their confusion they promptly complained that there was no clarity on how the many announcements would be financed. Most were probably dwelling on how little they had accomplished in their time, and missed the traditional dwelling on petty lists of facts and figures that used to stand in for the big ideas. Never before has a Railway Budget concentrated so boldly on how it would revive its fortunes from the mess they have long been in.

For the first time, there were no politically motivated new trains and routes announced, with a clear thrust instead on bringing the existing network up to speed, despite being severely strapped for cash.  

And yet there were no hikes in passenger fares for the Opposition to pounce upon. This marked the one populist move, given that the Railways still lose Rs. 26,000 crores every year on passenger fares alone! But, with the fall in diesel prices, it would have been difficult to justify so soon after the over 14.2% hike in June 2014.

Suresh Prabhu delivered a staunchly reformist budget speech, with robust plans to make sweeping changes for the better in the existing network. He intends to raise much of the financing needed on his own, as opposed to praying for all funds from the Ministry of Finance (MoF).

The Indian Railways, will however, to kick off, have access to more than Rs. 6 lakh crores in pension funds courtesy the MoF. It also plans to collaborate with various States and PSUs, according to a template used to finance the Konkan Railways in the past. This, in addition to partnering with foreign countries and financing agencies. Prabhu indicated that he had received expressions of interest from many quarters, without elaborating further.

Mr. Prabhu’s budget speech concentrated largely on plans to consolidate and better the consumer experience, and allocated 67% of its available funds to this end. It raised freight rates, expected to yield a modest Rs. 4,000/- crores. The Indian Railways will, it is calculated, raise another Rs. 17,655 crores on its own. The operating ratio is expected to be 88.5% in 2015-16.

Budgetary allocation towards capital expenditure however has been enhanced 84% over the previous year. 800 km. of track will undergo gauge conversion. Seventy-seven projects, involving doubling, tripling and even quadrupling of track over 9,400 km. along with its electrification will be taken up this year, representing an incredible 2,700% rise over allocations in 2013; at some Rs. 96, 182 crores! 

Just goes to show how the infrastructure of the Indian Railways has been neglected in the past.

Over the next five years, Prabhu indicated that at least Rs. 8.5 lakh crores will be invested in upgradation of facilities.  This then, is to be seen as the first stage of a five year jigsaw with some infrastructure initiatives that will extend even beyond this time-frame.

The key shift in emphasis for the moment which went down well with the public all over the country, is in terms of plans to sharply improve the customer experience by way of security, safety, comfort, hygiene, catering, design, and so on.

The Indian Railways will raise part of the finances necessary for its capital expenditure via multiple strategies including the leveraging of its land banks, some of which have been encroached upon, public-private partnerships, special purpose vehicles (SPVs) etc.

While this crucial area has not been detailed in the budget presentation, perhaps for strategic reasons, the tone of the Railway Minister indicated he had quite a few aces up his sleeve.

Over 70% of the common people interviewed by the various TV channels were happy with the Railway Budget, volubly appreciating the many people friendly efforts, even as the stock market seemed to signal its disappointment, probably because the project financing and timelines were not defined.

Besides, the Stock Market is far more concerned with the Union Budget, coming up on the 28^th. Investors are probably not used to regarding the Indian Railways as a driver of GDP growth and infrastructure.  But Suresh Prabhu, with his emphasis on better management practices, faster decision-making, greater accountability, etc. may be on his way to change this perception too.

For: NitiCentral

(826 words)

February 26^th, 2015

Gautam Mukherjee