Prabhu's vision is on track but various roadblocks ahead
Railways failed to meet Prabhu's target of last year to collect revenues of Rs 141,416.05 crore and achieved only Rs 136,079.26 crore. How will he match this year?
He earmarked capital outlay at 1.21 lakh crore, an increase of roughly 21 per cent from last year's Rs 100,011 crore. He obviously want more money to incorporate the provisions of 7th pay commission, but how much would go into developing the infrastructure, one needs to track the ministry all the year along. From where will Prabhu borrow money, who will fund the projects, which his ministry has to commit to fulfill the welfare agendas?
Transloc -a new kid (PSU) on the block, which will ensure door to door logistic connectivity is fine, but how much are they allocating here? This year the revenues of Railway dipped, and transporter made losses of whopping Rs 30,000 Cr. Primarily, because of the dip in the freight revenues and the cross subsidization to passengers.
Railways failed to meet Prabhu's target of last year to collect revenues of Rs Rs 141,416.05 crore and achieved only Rs 136,079.26 crore. How will Prabhu match this year? The budget had no mention of this. Many in his ministry blame global economy and dip in commodity prices for this, but at least his ministry must present a plan B. The idea of Prabhu to take the capital outlay to Rs 8.56 lakh crore by 2019, could derail, if he continues to fail on revenue receipts. Today the private investors are keen to get into railway sector, as they see it is improving and think it has a scope to improve more. But to sustain this confidence, Prabhu is required to increase the efficiency of revenues as well, especially if he wants to keep Railway as state owned monopoly.
Prabhu, may want the projects to raise debts from the financial institutions on their viability and not look at the finance ministry for budgetary allocation. Major of them are the joint ventures with the state governments and with the PSUs. 17 states have shown their intent to be part of the joint venture, but many of them are not willing to participate by making investments. They are pushing to monetize the land required by the Railways for the project and take the equities in return. This may ease the execution of several projects, but would not suffice the requirements of Prabhu for more capital requirement. Due to cross-subsidization of passenger fares, only freight projects are viable at this time. His plans also include new dedicated freight corridors North-South, East-West and East Coast freight corridors by 2019. The completion is designed to coincide with completion of Delhi-Kolkata and Delhi-Mumbai corridors. It took almost a decade to bring first two corridors from papers to ground. Since the policy now in place, one could hope that these new corridors would come up much faster and in a more efficient way.
On the books the PSUs of Railways Prabhu can raise Rs 40,000 crore but the future and their ability to repay would determine their destiny. This will determine the sustainability of private investors interest.
Last year, major chunk of money went towards creation of Dedicated Freight Corridor Corp (DFCC), construction of new lines, doubling of lines, and towards rolling stock (including engines, coaches, wagons). This is good, but this year major chunk of GBS will go in realizing recommendation of pay commission.
The vision elevating operating ratio to 92 per cent is fine, but Prabhu needs to rationalize the utility of 1.4 million staffers he has. The first step was taken when he talked about re-structuring the Railway Board and merging all the cadres, and this might increase the efficiency of the officers and improve their decision making. But the vision document presented had no detailing. How will he do it? Especially when super powerful unions are already up against many of these moves, including bringing in private investments and altering the cadres.
In last 17 months, Prabhu has pushed for technology and focused on improving the efficiency at almost every stage of operations. This include increasing the speed of laying tracks form roughly 4 km per day, to 7 km; average speed of both freight and passenger trains. But he also needs to achieve many of his party's political goals (populism) by doing small things right. The answer is yes, by all means, provided they come up as he narrated, and not lost in translation. His announcements also include starting four categories of trains Humsafar, Tejas, Uday, Antyodaya, a new push to the railway journey, along with providing food for infants on board, giving facilities for changing their diapers in toilets, or giving more quota lower berth for old age passengers, facilities to ask for cleaning of coaches via SMS, getting local cuisine on board. The list continues extending from the last year's commitment of providing free Wi-Fi at certain railway stations to bringing in FM radio to provide PA entertainment. His vision is on track, but does he has money to implement it?
To know more about the new trains and rationalization of fares and tariffs, one need to stay tuned to minister and ministry all the years along.