Not more trains, but change in view needed
When Dinesh Trivedi begins his Railway Budget speech on March 14, he will do so in a difficult year - sky rocketing inflation rates and slowing economy. Most will hope that there is no fare hike announced. Ajay Mittal writes.india Updated: Mar 14, 2012 22:06 IST
When Dinesh Trivedi begins his Railway Budget speech on March 14, he will do so in a difficult year - sky rocketing inflation rates and slowing economy. Most will hope that there is no fare hike announced. It is precisely this impact of the rail budget on travellers that has turned the budget into a political tool, shifting focus away from the important aspect of core infrastructure improvement, public-private partnerships (PPP), rail freight movement and its general integral relevance to the Indian economy at large.
Let us appreciate that the railways even today remains the lifeline of the Indian economy and is the logistics backbone of core sectors such as power, ports, iron and steel, mining, cement and agriculture. While without Railways, one cannot possibly imagine the India that we see today, it is also true that it currently accounts for only about 30% of the overall Indian freight traffic, a far cry from 90% that it used to move in 1951. This major downward trend was a result of the years of neglect in this core sector - India has added only 10,000 km of new track infrastructure post independence, while China has added thrice that much since 2007 alone.
In order to arrest this undesired downward trend which indirectly stifles the growth of the economy, it is pertinent that the sector addresses the issues afresh. What the Railways needs desperately is not just another budget but a drastic change in perspective. It needs to think about how it can garner all help and support from the private sector through PPP. A turnaround can surely be achieved by focusing the efforts towards expanding the network and enhancing efficiencies. The Railways needs to infuse much needed funds towards such core infrastructure- and efficiency-related projects and put the onus of investing in wagons, rolling stock and terminals on the private operators.
However, all of this costs money and it is no secret that the Railways' financial position has been under considerable stress off late. This financial pressure is one reason why the railway minister said that he wants a third of his department's investment requirements (Rs 750,000 crore) for the 13th Five-Year Plan to be funded through PPPs alone. But how will the model work when the first attempt with private container train operator policy in 2006 has turned into a colossal failure with most private container rail operator not making money because of unfavourable and protectionist policies?
Fundamentally, the Indian Railways should most importantly be able to identify and part with its multiple conflicting roles of a policymaker, licensor, operator and a regulator. The Railways needs to bring each of these roles under a separate body and draw clear distinctions with regard to the jurisdiction, powers and functioning of each authority.
Today I dare say that the Railways has not only missed a key opportunity but has been found wanting in understanding the criticality of the sector and more importantly the far-reaching impact that the ministry's actions create. So, when Trivedi delivers the Rail Budget, for once we all hope that it focuses on policy, organisation realignment and privatisation initiatives and that our parliamentarians debate more on these issues rather than the number of new train services that have been announced for their respective states.
(The author is group chairman & MD, Arshiya International.)