Putting railway reform on the fast track

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SummaryIndian Railways seems to be heading for a period of dwindling freight traffic and increasing operating ratios. The interim Budget of February 13 points to the uncertainties confronting the railways.

Indian Railways seems to be heading for a period of dwindling freight traffic and increasing operating ratios. The interim Budget of February 13 points to the uncertainties confronting the railways. The surplus, before dividend, shrinks to Rs 18,847 crore and the operating ratio shoots up 89.9%. The downtrend in freight traffic last October and November did cause concern, but hope revived with improvements in December and January.

The good news is that the last four years yielded a cash surplus of Rs 90,000 crore, but the Sixth Pay Commission denied the coveted figure of Rs 1 lakh crore. A substantial portion of this has already been used up through various funds to which the surpluses were allocated. The total closing balance under these at year-end is estimated at only Rs 13,323 crore.

The question then is how was all of this achieved? The railways contributes to, and benefits from, economic development. Its dream run in the recent past owed a lot to the 9% GDP growth in three successive years. Innovative operating and pricing strategies ably supplemented this. The political leadership deserves credit for its vision, allowing the system to function without interference, and putting the right men in the right positions.

I can vouch for the fact that all the earlier reports of expert committees—the Rail Tariff Enquiry Committee (Paranjpe Committee), the Railway Reforms Committee (Pande/Sarin Committee), the Railway Fare & Freight Committee (Nanjundappa Committee) and the Capital Restructuring Committee (Poulose Committee)—were dusted down.

Hitherto ignored recommendations relating to dynamic pricing, discounted pricing for loading in empty movement directions, upgrading of passengers to higher classes and so on were introduced, with beneficial results. But the railways has run out of ideas. Its stock needs to be replenished through widespread consultations with users and stakeholders, and with the help of expert review committees.

Although the railways has claimed not to have raised passenger fares and freight rates, charges have been increased both for passengers and goods. As pointed out by the Comptroller & Auditor General of India, additional charges are collected from passengers through higher reservation, cancellation and tatkal booking charges. Similarly, frequent revision of the classification of goods like coal, iron ore, cement, dolomite and foodgrain, as also charging goods up to 10 tonne in some sections beyond the marked carrying capacity of wagons, have yielded additional goods earnings.

All these point to the need for a review committee. The major rail users—in the cement,

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