Merger of rail budget with main budget allows Railways avoid public scrutiny of failures

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Updated: February 11, 2019 8:12 AM

The Railways' operating ratio, or the share of expenditure in revenue, this year was 96.2%—2 ppt better than the year before, but a 3.4 ppt slip over the target of 92.8%. When this govt took over, the ratio was 94%.

indian railwaysThe Railways’ operating ratio, or the share of expenditure in revenue, this year was 96.2%—2 ppt better than the year before, but a 3.4 ppt slip over the target of 92.8%. When this govt took over, the ratio was 94%(Representative image)

Of the 98 paragraphs of finance minister Piyush Goyal’s Interim Budget speech, two were about the Railways. In a relatively short speech meant to gladden various sections of voters, more was not expected. The details which a separate Railway budget provided were missing.

The practice of presenting a separate Railway budget was discontinued after 2016 as the event had become an occasion for grandstanding by ministers at the expense of the Railways. “Should commercial viability be the sole criterion to judge this need for connectivity,” Mamata Banerjee asked in her 2011-12 speech, and stated that she preferred “social responsibility.” There was something in that budget for everyone, including two Tagore museums. Banerjee represented a procession of railway ministers who regarded the Railways as also being in the business of bulk haulage.

The unintended consequence is that extensive public commentary on the state of the Railways, even if it were for a day or two, has got muted. Railway accounts are not easy to comprehend. This deprives lawmakers in the Parliamentary committee which scrutinises railway affairs an array of views which could have helped them hold the organisation accountable.

Goyal made laudatory references to the government’s stewardship of the Railways. The investment next year would be “highest ever,” he said, though a new railway minister in a new government will have to find the money. Similar claims were made by Banerjee in 2010-11 and 2011-12 and by Dinesh Trivedi the following year.
The operating ratio this year, or the share of expenditure (including appropriations for pensions and for replacement of worn-out assets) in revenue was 96.2%, Goyal said. This is a two percentage-point improvement over last year but 3.4 percentage point slip over the budget target of 92.8%. Even this improvement may have been achieved by pushing payments to the next year as the Railways does not keep accounts on accrual basis. When this government took over, the ratio was 94%—itself a terrible figure.

Total expenditure this year overshot the budget estimates by `3,100 cr while receipts fell short of them by `3,876 cr. The Railways increased the headcount this year in the lower grades. It had about 1.3 million on its rolls, each earning an average monthly salary of `73,625. Staff cost, including pension outgo, is 66% of total expenditure. It rose by `7,153 crore this year to `1,25,786 crore and has been budgeted to rise by nearly `12,000 crore next year. Staff cost hikes shaved off 55% of the incremental revenue this year and are anticipated to eat up 72% of it next year.

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The Railways hauled 1,266 million tonnes of goods, which was 56 million tonnes more than last year. Though the total distance travelled by the goods hauled fell by 2,213 million kilometres, freight earnings were `12,695 cr orehigher. The incremental haulage came mainly from coal and, to a lesser extent, from cement. The Railways expects to do 50 million tonnes more next year. Why the modest target, when Suresh Prabhu had said in his 2016 Railway budget speech that the two dedicated freight corridors were “scheduled to be commissioned by 2019”? Prabhu had lamented that the railway freight basket was dominated by 10 bulk commodities which had an 88% share by weight and value. The diversification to higher value goods has not happened.

Fewer non-suburban passengers travelled on the Railways this year. The number of the poorest of them—those travelling second-class—fell from a year ago by 62 million. They contributed `491 cr less to the Railways kitty. This is perhaps an indication of fewer job opportunities—and hence of lower migration. The numbers were also down in the comfort classes. Those travelling AC sleeper were 1.38 million less than last year but they paid `439 crore more—perhaps because of dynamic pricing.

Suburban passengers made up for the shortfall and, overall, the Railways carried 68 million more passengers than last year and earned `3,357 crore more.
Over the past five years, the number of non-suburban passengers travelling by rail has fallen from 3.72 billion in 2014-15 to 3.58 billion. But earnings from them have increased from `39,696 cr to `48,918 cr during this period.

Those travelling in AC comfort—sleeper, chair and first class- have increased by 20% over the past five years while earnings from them have grown by 40%. Within this segment the number travelling by 2AC has remained flat at about 26 million while those travelling AC3 tier has increased by nearly a quarter to 96 million. Earnings from them have risen more than proportionately—by 44%.

There has been a sharp rise in railway investment under this government. It has grown nearly two-and-a-half fold to `1,38,858 cr this year, comprising `53,060 cr in budget support and `79,297 cr largely in borrowings. There has been a greater reliance on extra budgetary resources. Under the previous, UPA, investment in the Railways rose by 34% over a five-year-period, to `52,060 cr in 2013-14.

This government had a freer hand than the previous one to restructure the Railways and make it competitive. The first minister, Sadananda Gowda, was a wrong choice for the position. Suresh Prabhu made many headline-grabbing announcements—mobility directorate, Mission Electrification, Mission Raftar—but achieved little. Finance minister Arun Jaitely said in his 2017-18 budget speech that ‘accrual based financial statements will be rolled out by March 2019.” Is that likely to happen? If railway traction is to be entirely electrified, will GE’s diesel engine plant in Bihar become a wasted investment? In his February 2008 speech, railway minister Lalu Prasad said trials of green toilets were ‘extremely encouraging.’ He had provided `4,000 cr “to put a permanent end to the problem of discharge from train toilets by providing green toilets in all 36,000 coaches by end of the 11th plan,’ that is, by 2012. Ministers may come and go, but the Railways is accountable to Parliament. Last year, Goyal told a newspaper that all railway coaches would stop discharging waste in the open by this year. We are waiting for another promise to be broken.

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