Rail minister to finish existing projects before planning more

Written by Subhash Narayan | Rajat Arora | New Delhi | Updated: Nov 6 2012, 07:59am hrs
PK BansalPK Bansal, railway minister
Notorious for announcing new projects every year that then face delays and cost escalations, the Union railways ministry is not likely to promise any mega-venture in the next railway budget, its last before general elections due in mid-2014. No new trains are likely either. Instead, rail minister Pawan Kumar Bansal plans to focus on completing projects worth R1.5 lakh crore announced earlier. Sources said this would be Bansals way of cleaning the financial mess he inherited from the ministry led until recently by former ally Trinamool Congress.

The number of projects in the pipeline excluding the dedicated freight corridors is humungous. We must prioritise and complete them ensuring there are no more delays, minister of state for railways Adhir Ranjan Chowdhury told FE, indicating new projects would be difficult at this juncture.

The minister is very clear that railways needs a pragmatic approach and must concentrate on feasible projects which can be completed in a time-bound manner rather than announcing big-ticket projects which do not see the light of the day due to lack of funds. Hes not keen on other populist measures either, a railway ministry official said.

Railways has the dubious distinction of having the largest number of delayed central sector projects, with cost overruns of over R65,000 crore.

In one of the worst cases, a freight operation information system approved in March 1983 at an estimated Rs 520 crore has been delayed by almost 204 months.

Analysts said if the minister intends to finish existing projects rather than start new ones, it would be welcome step, and the first in a series of steps required to put this organisation back on track. However, they are sceptical whether the minister, however well-intentioned, would be able to pull it off, considering the populist appeal of new project promises.

The railways has little financial headroom for more projects. The organisation, which has been losing passengers and freight to road, has not seen a fare hike for ordinary classes since 2003. Dinesh Trivedi, who announced a modest hike in the last rail budget lost his job as his party protested, and the hike was rolled back by the incoming minister.

In 2011-12, the railways operating ratio rose to 95% against the budget estimate of 91.1%. This means the railways spends Rs 95 to earn Rs 100, leaving it with little surplus to invest in new projects. In the Budget for the current fiscal, the estimate is to have a operating ratio of 84.9%. Even if this is achieved, maintaining a healthy ratio would require halting unviable projects designed and driven by populist and regional considerations, officials said. Since 2009 when the TMC won the railway portfolio, around 17 projects at an estimated cost of Rs 40,000 crore were announced for West Bengal.

In the latest Budget, Trivedi had announced 725 km new lines, 700 km doubling, 800 km gauge conversion and 1,100 km electrification. The allocation for these were Rs 6,872 crore, Rs 3,393 crore, Rs 1,950 crore, and Rs 828 crore respectively, even when similar projects announced in previous Budgets were not complete.

A CAG report in May said railways was in a severe financial crunch with accumulated funds eroding 93%. The auditor suggested the railways improve its finances and rationalise freight and passenger tariffs and explore alternative sources to finance capital expenditure. The CAG suggested that the railways must take a comprehensive relook at its budgeting process and make projections more realistic, so as to ensure that funds are fully utilised for the purposes sanctioned.