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Putting India back on track

Playing politics with fares has brought the railways to its knees. This is dangerous.

india Updated: Jan 10, 2013 21:32 IST

On taking over as railway minister last year, Pawan Kumar Bansal immediately declared his intention to raise passenger fares, which have been in the deep freeze for the past 10 years as first Lalu Prasad and then Mamata Banerjee used the Indian Railways as their fiefdom. Over this period, the railways progressively increased their expenditure from Rs. 78.7 in 2006-07 to Rs. 95 in 2011-12 for every Rs. 100 they earned as freight income kept on subsidising passengers. Dinesh Trivedi, the Trinamool Congress railway minister who proposed a fare hike last March, lost his job for attempting to bring down operating expenditure as a ratio of income to 74 by 2017-18. With the ministry returning to the Congress, Mr Bansal is now taking up overdue reforms. The railways must generate a surplus on their Rs. 1,00,000 crore annual income to upgrade their networks to carry more goods and people. Mr Bansal estimates his fare hikes will bring in Rs. 6,600 crore a year more. He is right in his assessment that people are ready to pay for better services.

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 they can handle it. 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; and the railways are on the right track by 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 and corporatising large chunks of the network.

A task force set up to look into the modernisation of the railways estimates the bill over five years will add up to Rs. 8,39,000 crore. The railways and the government could cough up half this amount, the rest can be borrowed or invested by private players. The task force has come up a clutch of recommendations that question how the railways are managed; the businesses they should and should not be in; the scope for private partnerships in what is the country's largest commercial organisation; the state of its tracks, rolling stock, signalling systems, accounting processes and human resources practices. Each is eminently reasonable, and would be lapped up by any business organisation that expects to run as a going concern. Playing politics with fares has brought the Indian Railways to its knees, it's time we moved beyond this dangerous game.