1.3:1 for China)—and then loses on freight revenues since this makes freight rates among the most expensive in the world. In FY12, when nominal GDP grew 15%, freight traffic grew just 6%. This year may not be much better.
Nor is it just a matter of the money, important as that is. According to the Kakodkar panel on Railway safety, around a fifth of safety-related posts in the Railways are vacant; the 52 kg/m rail tracks used, the panel says, are “not prudent to use” and around 43,000 ICF coaches used “are no more safe at the present operational speeds”. In a situation like this, the only feasible solution lies in dramatically hiking the involvement of the private sector—R2.3 lakh crore is to be mobilised through PPP in the current Plan period—but there has been no progress on this so far. While nothing has been heard of the grand plan to make the New Delhi Railway Station into a three-level modern airport-like facility and, as the column on the Reflect page points out, four years after the Cabinet approved a programme for an electric loco to be made on a PPP basis, the Railways have modified the proposal in a way that makes PPP more difficult—even irrelevant. Mr Bansal’s performance today will be the first peek into the UPA’s new reformist credentials.
Key expenditure measures
* Level of overall public spending increased only 3-4% in nominal terms from 2012-13, implying a sizeable real terms cut. Defence and development projects to be hard hit. Modest increase in existing welfare benefits.
* Fertiliser subsidy likely to be cut, saving 0.1-0.2% of GDP. Diesel subsidies to be phased out by mid-2014.
* Provision for introduction of the Food Security Bill—roughly 1% of GDP in a full fiscal year.
* Additional capital to public sector banks to help them meet Basel III requirements – 0.2% of GDP.
* Payment to states for loss of central sales tax revenues prior to the introduction of GST, possibly in December 2013 – about 0.1% of GDP
Key revenue measures
* No change in income or headline corporate tax rates. Tax slabs likely to be