Railway Budget 2014-15 of India

Coming soon after the first dose of ‘bitter medicine’ in the form of the 14.2 per cent hike in passenger fare and 6 per cent hike in freight tariff, the much-awaited first major policy statement of the NDA government was expected to bid adieu to the shameless populism practiced by the previous governments, and spell out further drastic measures to put the behemoth of Indian Railway back on track.

Critical Analysis of Railway Budget 2014-15

• Thumbs Down by Stock Market

However, going by Sensex, the barometer of investors’ mood, Sadanand Gowda’s debut as Railway Minister has been a big disappointment if not a complete damp squib. Rail stocks like Titagarh Wagons, Kernex Micro , Texmaco and Kalindee Rail, which had touched their 52-week highs were down around 5-13 percent intraday on Tuesday after the Rail Budget was presented, though a few others like Container Corporation of India and CMC were up 4-8 percent. The reason is clear: expected to be revolutionary, the Rail Budget 2014 turned out to be evolutionary dispensing diluted medicine in homeopathic dosages.


• Nothing for ‘Bharatvaasi’(Indians)

  Inheriting a crippled organization, Gowda was expected to make some drastic announcements in the Rail Budget 2014 to prevent further decline in the health of the Railways. But all that he has done is repackaging the abject populism of the previous government as passenger-friendly reforms, which might resonate with urban population, with the promise of a bullet train here, a few ‘high-speed’ trains there, one or two food courts at major stations, and Wi-Fi connectivity at some airport-like stations, while a vast majority of the 2.5 crore daily passengers continues to yearn for something as basic as tout-free booking windows, clean platforms, stench-free toilets, less-crowded general coaches and hygienic food. There has been no mention of the steps in the Rail Budget 2014 to decongest the general coaches in which passenger travel for up to 30- 36 hours stuffed like cattle.



• Where is the Money

  The most outstanding feature of the latest Rail Budget is the vagueness shrouding the source of wherewithals needed to fulfill the promises the Railway Minister has made. It is true that a budget document outlines only the generalities, specifics come later on. But after beginning his Rail Budget 2014 speech Tuesday by blasting the previous government for not completing 359 projects of the 676 sanctioned in the past ten years, Gowda was expected to share some of his plans about financing the Diamond Quadrilateral that will cost nearly Rs 9 lakh crore, and the proposed cash guzzler Mumbai-Ahmedabad bullet train for which he has allocated merely a Rs 100 cr. It is also unclear, how the Railways will mobilize the Rs 5 lakh crore needed for completing the ongoing projects. Though Gowda has invoked the mantra of Public-Private-Partnership for fulfilling his tall promises, the private players are unlikely to share his enthusiasm, given the ways in which Railways maintain its accounts.

• Misplaced Emphasis

  Prime Minister Narendra Modi sees the Indian Railway as a ‘commercial enterprise’ which cannot be subsidised forever. However, Gowda’s budget does not seem to betray his Prime Minister’s sentiments. Freight earnings account for 70 per cent of Railway’s revenue and largely subsidise the loss on the account of passenger fare. Yet, Railway’s share in total freight transported in the country has come down from 38 per cent in 2006-07 to 31 per cent in the latest fiscal while diesel guzzling trucking industry, despite being three times costlier than Railways, has increased its share to 68 per cent. This at a time when the share of railways in freight transport in economies with substantial railway networks is around 40 per cent and growing.
  
  How the Railway Minister plans to reclaim the lost ground and make the India Railways the largest freight carrier in the world, the Budget 2014 is silent about. What the budget vexes eloquence about is how the freight rates, which are already among the highest in the world, will be linked to diesel prices and will rise in tandem thus making the Railways even less competitive in comparison with trucks.
  
  The capacity of the existing infrastructure can be augmented by adopting cab signaling. Unfortunately, this technology, a must concomitant of high-speed trains finds no mention in the Rail Budget 2014



• No Tech Punch

  It would have been better, had the minister, in addition to relying on freight tariff hike to the operations profitable, divulged the plans to plug the pilferage of the revenue due to rampant corruption among officials, the tip of which was unearthed last year by the Comptroller and Auditor General of India in the Rs 17,000 crore scam in transporting iron ore.

• Millstone around the Neck

  Indian Railways prides itself on being the largest employer in the world. But this pride has a price: personal expenses account for 40 per cent of earnings operational expenses of Railways. This results in abysmally poor operating ratio of 94 per cent. There is no mention how the productivity of this vast force of employees will be improved.
  
  But the prelude to the promised Achhe Din is not all bad news. Gowda plans to award contracts for the 1000-km Dedicated Freight Corridor, soon. Flexible freight charges to make full use of returning empty wagons is being mulled.