The railways over the past five years have come to be regarded as a hugely profitable enterprise and Mamata Banerjee’s first rail budget in this government will be tested at the bottom line. Admittedly, she does not inherit a winning hand. Her wage bill has shot up by around Rs 14,600 crore while earnings are slowing down. The more modest revenue guidance at Rs 90,626 crore for 2009-10 — Rs 5,000 crore less than what her predecessor Lalu Yadav had thought possible a few months ago — is informed by the way the previous quarter played out. In the process, the railways’ operating ratio — the rupees spent to earn every extra Rs 100 — has deteriorated from 88.3 in 2008-09 to 92.5 in 2009-10. Eventually, the top line could have a significant upside: Ms Banerjee is targeting nearly 6 per cent growth in cargo handled and, with the freedom to change haulage rates throughout the year, she just might be able to pull a few rabbits out of the hat if the economy picks up steam.
The emphasis on capacity building would indicate the new railway minister is underplaying her hand. She plans on acquiring 18,000 wagons — up from 11,000 a year ago — upgrade or lay 6,000 km of tracks, draft 500 new locomotives and introduce 57 new trains. Capital expenditure on this scale would not be out of place in the boom years and essential if the railways hope to claw traffic back from the roads. Putting the railways’ land bank to better use, on-schedule delivery of time-sensitive cargo, expanded ticketing and on-board entertainment, improved station infrastructure, and a vision statement would sit fairly high up on any business plan for the 150-year-old organisation.
What Ms Banerjee seems to have accomplished is a marriage of canny entrepreneurship with uncanny populism. The stream of promises for passenger amenities, jobs and investment is the icing on a Rs 8,631 crore surplus the railways should bring in this year. Stakeholders of Indian Railways — the 1.4 million workers, the 6.5 billion passengers and the companies that carted 833 million tonnes of cargo on it — will most likely find Ms Banerjee has what it takes to keep the railways chugging along. In the end, does it matter whether the new coach factory comes up in Madhepura or in Kanchrapara?