FE Editorial : Slow train to nowhere

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SummaryIf 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'.

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 Tuesday’s 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 Trivedi’s 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 achieved—even 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 year’s 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

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