Business Today
Populist plans eating into rail profit for long
The department has not had the benefit of a leader with a vision to address the basic issues - passenger safety, amenities and infrastructure development.
The misfortunes of the railways do not start and end with Mamata Banerjee. The department, once a crowning glory of India, is a victim of the populist mindset of successive ministers - starting from CK Jaffer Sharief and Nitish Kumar to Ram Vilas Paswan and the current incumbent from West Bengal.

Despite Lalu Prasad's jugglery with figures and the hype that followed, he remained, like most of his predecessors and the immediate successor, a leader with a provincial mindset in charge of a national asset.

In fact, the department has not had the benefit of a leader with a vision to address the basic issues-be it the glaring discrepancies in passenger and freight fares or the total disregard for passenger safety, amenities and a long-term agenda for infrastructure development.

A senior railway officer said: "The problem is not just the current minister's preoccupations. The fact is that a majority of her predecessors have used the ministry to cultivate their political constituency. For instance, have you heard of Shimoga and Talguppa? Or Fathua and Islampur? Not really. These were gauge conversion projects under former railway ministers Jaffer and Lalu in the west coast and Bihar. These projects have zilch value if you view them in a holistic way. You don't get to see more than two trains daily on these new converted lines."

These projects were pushed at the cost of other, important, proposals that require investments and vision.

For instance, the Golden Quadrilateral route, that carries about 70- 80 per cent traffic and earns as much revenue share, has not been paid any attention.

More rail routes are required to connect tourist destinations in Rajasthan and the invaluable Buddhist Circuit in Bihar than converting non-existent halts into stations and stations into junctions to serve one's electorate.

Because of such populist concerns, the department has not made revenue gains, despite an annual passenger growth rate of 10 per cent.

In fact, Mamata proudly institutionalised her wrong business practices with the famous spiel "kiraya nahin bhadega ( fares won't increase)", when she was railway minister during the NDA regime.

The line was duly adopted by a succession of ministers - Nitish, Paswan and Lalu - who steadfastly refused to hike fares.

The railways' own estimate puts the average income from a single passenger to a mere Rs 30! According to RC Acharya, a former railway board member, business will continue to be "in the red" given the political leadership's preoccupations with populism.

"Passenger business will continue to be in a loss unless the tariff is hiked by at least 7 to 8 per cent every year for the next five years to keep up with the inflation.

It has already cost about Rs 65,000 crore in losses over the last five years, ending in 2009-10, and it is expected to incur a further loss of Rs 20,000 crore for 2010- 11 to the department," Acharya said.

Hence, as the minister gets ready to present her third budget in UPA- II, the financial state of the railways is no better than a decade earlier.

"In 2002-03, Nitish went with a begging bowl to the finance minister and got a massive bailout package of Rs 32,000 crore - Rs 17,000 crore as Special Railway Safety Fund (SRSF) and Rs 15,000 crore for the National Rail Vikas Yojana. The SRSF was provided to replace all overage assets such as track, wagons, coaches, locomotives and signalling equipment, as well as strengthening of identified bridges," said Acharya.

Now, almost a decade later, the railways need another bailout package estimated at Rs 50,000 crore just to complete not only some of the more urgent line capacity works, but also give a boost to the multi-crore dedicated freight corridors.

The department has not been able to complete these projects which would have enabled the railways to make a quantum jump in its capability to transport freight and earn revenue 10 times more than any passenger train running over the same track length.

It is with dark irony then that insiders view Mamata's pledge in the last budget to add "1,000 route- kilometres of new lines during 2010- 11". For that, the railways have not progressed more than 230 km so far.

Mamata's Vision 2020 fixes a grand target of adding 25,000 km in the next 10 years, a plan dubbed as "unrealistic" by her own officers.

With the minister totally devoted to the upcoming assembly polls in West Bengal, all that is expected is populist plans of more new trains without additional fare hike, new lines and projects for the state that put additional burden on the already overstretched resources of the department.
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