If railways minister DV Sadananda Gowda is aiming to substitute “good economics” with the “bad politics” of his predecessors, he appears to have made a beginning.
Railway minister D V Sadananda Gowda and minister of state for railways, Manoj Singha at Parliament before presenting the railway budget in New Delhi. (Sonu Mehta/HT Photo)
No grandiose mega projects, no train loads of goodies such as travel concessions for sportsmen or journalists, nor even a long list of new trains to please voters – Gowda has managed to buck the trend of populism that has for long been the hallmark of railway budgets in India.
Freed from the pressures of coalition politics, the new railway minister has focused on diverting funds for projects nearing completion and on policy initiatives that could help rescue the public transporter from its precarious financial state.
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Indeed, the “populism” of past railways ministers, many of them shackled by obligations of please-all politics, has sapped rail finances. The cost of meeting social service obligations alone, a euphemism for non-remunerative projects, is estimated at a whopping Rs. 20,000 crore.
So what is now required to fund pending projects is an astronomical investment of Rs. 5 lakh crore (at the rate of Rs.50, 000 crore per year for the next 10 years), including for 317 pending projects of new lines, doubling and tripling projects, that alone would Rs. 1,82,000 crore.
Gowda made no bones on his criticism of his “esteemed predecessors”, who he said “mismanaged rail finances” and fell prey to the ‘nasha’ (intoxication) of claps in parliament when they announced these projects and kept passenger fares unchanged.
As he elaborated in his budget speech, there is a good enough reason for such criticism. Surplus funds of the railways declined from Rs. 11,754 crore in 2007-08 to Rs. 602 crore in the current fiscal. The operating ratio (money spent against every paisa earned) deteriorated by 2,7% over the revised estimates and was placed at 93.5%. This means that for every rupee earned, the railways spent 93.5 paisa. And the surplus too has been depleting fast, he said.
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The focus of past railways ministers has also been more on constructing new lines (which do not meet operational costs), while they have been less enthusiastic on doubling and tripling projects (which can de-congest the network and bring in money).
In the last 10 years, the railways have made an investment of over Rs.41, 000 crore in laying 3738 km of new lines, while allocating only Rs. 18,400 crore towards doubling projects of 5050 km.
Of the 99 projects of new lines worth Rs.60,000 crore that have been announced in the past 10 years, just one has been completed while four projects that are more than three decade old are still incomplete, Gowda pointed out.
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Seeking an urgent “course correction” for the railways, Gowda spoke of a “near plan holiday approach” and stressed on innovative funding option such as leveraging resources of railways PSUs and attracting private investments, including foreign direct investment in overhauling the country’s rickety rail infrastructure.
To that end, tweaking the existing Public Private Partnership (PPP) policy to attract investment constitutes a critical component of the new railways minister’s plans.
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