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Lay tracks for tomorrow

The railways need to build capacity now. Think laterally about finances.

india Updated: Feb 25, 2010 02:34 IST

It is tempting in 2010 to set out a 2020 vision for the Indian railway network. Mamata Banerjee’s white paper last December was a realistic assessment of how the railways need to morph in a competitive environment; some of that sobering analysis finds place in her budget for 2010-11. Every other rupee the railways earn comes from carting coal, iron or cement and the country’s infrastructure deficit should keep the railways in business provided it can handle it. The Chinese lug twice as many wagons on a rail network roughly our size to carry nearly four times our freight. Around a fifth of India’s tracks are still metre gauge, rendering them unfit to carry cargo.

Capacity building is vital if the railways are serious about reclaiming market share lost to highways and pipelines. And capacity on this scale does not derive from incremental gains in loading wagons and turning them around faster. A shared network for goods and people slows both down; Ms Banerjee is on the right track when she goes out seeking private investment in dedicated freight corridors, rolling stock, last-mile connectivity and even in running trains. There is also merit in farming out heavily subsidised mass transit systems in cities to their local governments. The minister, however, baulks at taking the next logical leap of corporatising large chunks of the network, and is content in seeking joint ventures at the fringes. The social obligation Ms Banerjee talked about comes with a cost: salaries and pension of 1.4 million staff account for half the railways’ expenditure and 85 per cent of all rail accidents between 2001 and 2006 were caused by human error.

With expenses eating 92 paise of every rupee the railways earn, the minister had little elbow room in building infrastructure. Track and rolling stock additions are broadly in continuity with last year’s targets. The lion’s share of extra money the railways expect to earn will come from cargo rates raised later in the year. Seasonal freight pricing has become a preferred tool to increase railway revenue and capacity usage while keeping up appearances on cross-subsidisation of passenger fares. Ms Banerjee has, despite a substantially higher wage bill, withstood pressure from her alliance partners urging her to raise fares. Ms Banerjee’s widely expected populism was mainly confined to lower rates for hauling grain and kerosene. Her equally widely expected parochialism, on display in a string of project announcements, was not out of line with that of her predecessors.