Suresh Prabhu must find practical solutions to improve railway finances and funding
When the new government constituted the Bibek Debroy committee to fix the functioning of the Railway Board, the first question that came to mind was: Why do you need another committee to find out what is wrong with the Indian Railways when umpteen number of panels and white papers in the past have dwelt extensively on the issue and have suggested diverse solutions?
Ask Debroy what is he doing that will be different from the previous efforts and he will tell you, the new committee will not only suggest reform measures but will also prescribe ways to achieve the objectives.
The committee is travelling throughout the country to make a ground-level assessment of the problems and is slated to submit a draft report within six months.
While this committee is doing its work, the new railways minister, Suresh Prabhu, has now asked his officials to prepare another white paper.
But again, why does he need a white paper to be presented in Parliament when the Parliamentary Standing Committee attached to the previous Lok Sabha, in its various reports, has already discussed what ails Indian Railways and how to tackle its teething problems.
Prabhu, with his penchant for reforms, would do well by looking at these reports and begin the work assigned to him without wasting time.
The two main problems of the railways have been project execution and poor passenger amenities.
The Standing Committee, in its report in February this year, clearly said, “There is a definite need to balance the role of the Railways in effectively fulfilling the dual roles of social service obligations and as a revenue earner”.
But this is easier said than done in the absence of adequate funds. The panel pointed out that the Gross Budgetary Support(GBS) given by the finance ministry for railway projects do not keep pace with the number of projects sanctioned on socio-economic considerations and inflationary trends. As a result, at the end of FY13, railways had a throw forward liability of around R4 lakh crore for its ongoing works and rolling stock. The ministry had sought a GBS of R3,16,892 crore for the 12th plan, but got only R1,94,221 crore.
So, do you need a new committee or a white paper to know that funds constraint is at the core of railways’ problems, especially when the modes available for augmenting resources are also well known?
The railways, on its part, has already embarked upon austerity and economic measures, rationalisation of fare and freight rates and commercial use of surplus land to augment its internal resources but till the time the government finds ways for pumping in private investments, both domestic and foreign, railways will remain plagued with the resource crunch. What the new railway minister needs to do is expedite clearances of the railway projects by bringing the states on board and tap funds by ensuring adequate returns; no panel can help him in this.
There has been enough talk on reforming the railways, it is time now to walk the talk so that bullet trains and freight corridors take off fast.
Then, the passenger amenities also need to be improved quickly. Here also, successive railway ministers have promised heaven but there has been no veritable change.
If the government has failed to make any headway in implementing the project to develop 50 world class stations including Delhi and Mumbai through the PPP mode, it is not just the problems posed by the clearances required from the local authorities that are to be blamed.
The very concept needs to be reworked and it would be a good idea to develop those stations first where there is enough space to create world-class infrastructure, and not in Delhi and Mumbai, where the area around the station is already congested.
The plan to develop multi-functional complexes housing shopping outlets, budget hotels and parking facilities in about 200-odd stations has also run into problems, mainly because of the government clearances—this can be expedited now.
While these may take time, the railways can think of outsourcing construction and maintenance of sanitation and other facilities, utilised by over 25 million passengers at more than 8,000 stations, that it has to the private contractors.
But there are larger issues also that need to be tackled to get to sustained solutions. There is a clear need to separate the railways’ commercial role and social obligations. This requires the introduction of new accounting norms and the recommendations of the Debroy panel would be helpful here, in segregating the areas where the railways, on its own, will have to find ways to finance its projects and the ones where the financial responsibilities would need to be handled by the government.
At some point of time, a mechanism will also have to be found for a direct government funding of the subsidisation of the passenger fares on the lines of LPG subsidies. Going ahead, the railways would do well to introduce Aadhaar in the ticketing system across the board as the first step towards such a set-up.
The problem with the railway fare system today is that it has to predominantly take care of the 90% of the passengers in the unreserved segment. A good idea would be to improve facilities in the upper-end trains like Rajdhani and Shatabdi, and charge more from the passengers belonging to the 10% travelling with a reserved seat. It may be a mere coincidence but to Prabhu’s advantage, Dinesh Trivedi, who lost his job as the railway minister in the UPA government because he wanted to reform the railways’ functioning against the wishes of his party chief Mamata Banerjee, is heading the Parliamentary Standing Committee on Railways currently. Prabhu and Trivedi can join hands now to bring railways on track at a faster pace.