Financial Daily from THE HINDU group of publications
Monday, Feb 28, 2005
Trundling down the beaten track
Mr Lalu Prasad could not restrain himself from reading out a long list of new lines and new trains, surveys and projects, details of recruitments, reservations, and concessions. This populist propensity rendered his exercise just another pedestrian, plodding piece of prose, ignited by no spark of wit, nor uplifted by any flash of inspiration. Clearly, the Minister had his priorities, and the easy way out was to trundle down the beaten track.
The Railway cadre has a core competence that could have been adequately tapped, a rich vein of fresh ideas that could have taken the Budget into fresh fields and pastures new.
An effective institution with a history of achievement, the Railways has again demonstrated its innate strength and resilience, having registered as much as the estimated 43 million tonnes of incremental freight traffic during 2004-05; a revised tally of total earnings of Rs 46,635 crore against the budgeted Rs 44,797 crore for the year; expecting to improve the operating ratio to 91.2 per cent from the budgeted 92.6 per cent for 2004-05.
The performance has spurred the Railways to progressively aim at an operating ratio of 85 per cent and to implement an Integrated Railway Modernisation Plan to subserve the demands of the buoyant economy.
No doubt, the Budget promises to take some staccato steps towards augmenting the Railways' capacity and improving asset utilisation without a clear strategy spelt out for a time-bound restructuring of the organisation and reorienting the mindset.
Such initiatives as single-window value-added services in terms of warehousing complexes, mechanical handling systems, a pragmatic private sidings regime, double-stack container trains, improvement in the track structure and the wagon fleet, "Wagon Investment Scheme" do not inspire confidence.
A New Delhi railway station becoming "a model station," like many other initiatives, has been talked about umpteen times and so also the commercial exploitation of railway land.
The Railways has given the go-by to its corporate plan, steadily swerving from the main grid it charted to achieve 15 per cent reduction in the cost of transport in real terms, to optimise investment, to improve productivity of assets, to adopt cost-based tariff policy, and to divest auxiliary activities.
Rationalisation of freight tariff structure is welcome. So, also the passenger fares being left unchanged. But the Minister has missed the "historic" opportunity to bring in an element of rationality in the fare and freight tariffs.
The seriously skewed structure has been crying out for a redemption; the short-distance second class ordinary train journeys, which are better done by road, have been an unmitigated drag, eroding precious capacity on the Railways busy trunk routes, besides straining its finances.
Likewise, freight charges for a number of commodities have been irrationally increased time and again.
The proposed "Premium Registration Scheme" is an admission that the Railways faces shortage of capacity even for export traffic to move in normal course.
There is a case for the Railways to generally lower tariffs in the context of steadily evolving competition from other modes. There is a huge market for the Railways to earn and to effect enormous savings in costs. When the true `value' is not charged, market distortions occur, often leading to unintended segments being subsidised.
The Rail Budget must perforce be a statement of the Railways plans and programmes, its agenda of action, including for its extensive re-engineering. What it must not be is a catalogue of services and surveys, trains and lines, halts and concessions.
The Railways as a rule misses out on the opportunity to appropriately explain to the MPs the grave distortions, for example, that have been unnecessarily allowed to creep in, for freight rates for goods traffic because the Railways need to earn resources to fill the gap caused by irrational persistence of retaining low fares for ordinary short distance and suburban passenger services.
The Minister should seize the opportunity to spell out the important milestones achieved and intended in the context of the Railways long-term business plan, its long-range vision.
The occasion must help the supreme body understand the complexities inherent in the management and operation of this leviathan.
It should convey in intelligible language how it may improve yields, brace itself for the pivotal role it must perform as a carrier of freight and passengers in the best interests of the economy, at the most competitive prices, safely and reliably.
The Budget must stimulate the MPs' interest in the Railways: To apprise themselves of global transport development strategies veering round rail revival on grounds of environment, safety and land use vis-à-vis roadways.
(The author is a former Chairman of Concor.)
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