FE Editorial : Slow train to nowhere

Written by The Financial Express | Updated: Feb 27 2013, 06:38am hrs
If the Railway Budget was supposed to provide an inkling of whether the Union Budget to be presented tomorrow is going to be reformist, the signal it sends out is a resounding no. While the diesel fare hike took away 30-40% of the impact of the passenger fare hike in January, few expected railway minister Pawan Kumar Bansal to hike passenger fares again even though losses here rose from R4,955 crore in FY02 to R24,600 crore in FY13. But then no one expected him to hike freight rates again, more so after a whopping 30% hike in FY13. As a result of Tuesdays hike, the ratio of earnings per passenger kilometre to that earned per freight tonne kilometre has fallen from 0.31 in FY01 to 0.26 in FY14 (this ratio is 1.3 for China). And this is assuming Bansal can meet his ambitious targets. The huge FY13 freight hike saw freight tonne kilometres rise just 0.4% in FY13 while FY14 is looking at an ambitious 4.7% hike. Curiously, Bansal is factoring in a slower FY14 growth in passenger traffic while projecting a 30% increase in revenues due to the January hike. In other words, a slippage in revenues look likely.

What is more worrying, of course, is that Bansal admitted he has little chance of achieving targets in a business-as-usual scenario but found it impossible to do anything at all. So, he continued with his predecessor Dinesh Trivedis plan to bring in an automatic fuel price adjustment in tariffs, but this is to be limited to freight and not to passenger fares. The minister admits the internal resource generation target of R1.05 lakh crore for the 12th Plan is a tall order given the Railways could generate only R10,000 crore in the first year of the Plan, and yet he does little. There is, he says, an ambitious R1 lakh crore PPP target for the 12th Plan, but there is no concrete plan outlined as to how this is to be achievedeven mention is not made of possible PPP railway stations or production units.

In which case, how does Bansal plan to get the all-important operating ratio down from 88.8% in FY13 to 87.8% in FY14 The same way that he managed to keep this years ratio down to 88.8% (though this is much higher than the budgeted 84.9%). Contributions to the depreciation reserve fund were down to R7,000 crore in FY13 as compared to the budgeted R9,500 crore and those to the capital fund were down to just R425 crore as compared to the budgeted R5,000 crore. In FY14, the development fund is to get a third of FY13s R9,984 crore though the capital fund is to get nearly R5,000 crore moreall told, these three funds got R17,500 crore in FY13 and will get R1,000 crore less in FY14 though passenger and freight revenues are projected to rise R18,000 crore in the year. Another R715 crore was saved in FY13 by lowering the dividend paid. Interestingly, the Railways cant seem to even get a fix on something so basic as pension outgoas compared to the budgeted R15,800 crore in FY12, the actual figure was R17,610 crore and, as compared to the budgeted R18,500 crore in FY13, the outgo was R20,000 crore. The pice de rsistance, despite all this, is Bansals plan to hire 1.5 lakh more persons this year.