Mamata Banerjee was apologetic for her thick accent while presenting the budget on Wednesday. She needn’t have. Her message was very clear: will fight price rise, even if it meant ignoring concerns about railways’ financial health.
<b1>So, there will be no change in passenger fares — planning commission was pitching for a hike — and the freight rates on select, but significant items such as kerosene and food grains, will be cut to keep prices down.
Indian Railways is not in the red yet, or close to it. But concerns have been raised about its declining profits and rising expenses when compared to earnings.
She was expected to take tough measures, but ducked. “This budget has only Bengal and all others are left ‘Kangal’ (poor),” said senior BJP leader Ananth Kumar to reporters outside Parliament.
CPI leader Gurudas Dasgupta also said the budget was written with West Bengal elections in mind.
“The budget would score nine on 10 on the populist scale,” said S Murali, former member of the Railway Board.
Banerjee announced 54 new trains, including 10 Durantos, and promised to construct over 1,000 km of new rail lines over the next year. She doled out projects and sops for everyone, assuring impatient MPs there was something for everyone.
But she also warned a persistent MP: “If you don't listen, I will cut it (cancel your constituency’s name from the list).”
And there was instant gratification for those who fell in line. “Jaunpur bhi jayega (it will go to Jaunpur too),” she promised a member pressing for an extra stop. It was not in the budget but she penciled it in.
A stop in Jaunpur may not cost much but experts have been warning of spiraling expenses. The operating ratio, proportion of expenses to earnings, which was a healthy 75 per cent in 2007-8, was up to 94.7 per cent in 2009-10. The Railways hope to bring it down to 92.3 per cent in 2010-11.
Though the budget proposes to raise net surplus from Rs 951.03 crore in 2009-10 to Rs 3,173 crore in 2010-11, these figures were called “peanuts” by experts when compared to the figures of some years ago.
These couldn’t all be attributed to bad financial management. “Economic downturn and Pay Commission impact contributed to declining trends in Railways earnings,” said Murali.
Signs of a cash crunch abound. Only Rs 373.09 crore was provided for new projects. Many projects come with riders: they’re either proposed in the public-private partnership (PPP) mode or are “subject to sanction by the Finance Ministry and Planning Commission”.
And there isn’t much help Banerjee can expect to get.
The Railways had sought Rs 14,00,000 crore for the Accelerated Rail Development Fund for project implementation over 10 years. But it’s getting only Rs 15, 875 crore in this budget.
Then her investment plan. “This will depend on execution of the PPP model and requires dramatic changes in the financing model,” said Abheek Barua, chief economist, HDFC Bank.