The Hindu Business Line : Rail Budget and the aam aadmi

The unveiling of the Railway Budget in Parliament in the last week of February by the Railway Minister, just ahead of the Union Budget, has become a mega media event, with live TV coverage, supplemented by pre- and post-Budget panel discussions.

Interruptions of the Minister’s speech by disgruntled members of the Opposition, which have become the rule rather than the exception in recent years, and the Minister having to rush through his speech like a vedic chant in the ensuing din and confusion, have further added to the drama of the occasion.

Over the years, the above routine has remained more or less unchanged. Occasionally some dissenting voices are raised about the need or rationale for a separate budget for the Railways (a uniquely Indian practice dating back to the 1920s) and the secrecy that precedes its presentation.

With no drastic organisational reform of the Railways on the cards and it continuing to be an arm of the Central Government in the foreseeable future, doing away with a separate budget for the Railways is almost unthinkable.

Nevertheless, as the single largest public transport entity in the country, it is as well that the Railways’ affairs are exposed to public scrutiny and media glare at least once a year.

Political statement

It needs emphasising that the Railway Budget like the Union Budget is as much a political statement as it is a financial review. However, a veritable treasure trove of information, facts and figures (contained in the Budget documents) accompanies the Budget speech of the Minister, that are generally not available to the public at large. What hits the headlines are only the pronouncements in the Budget speech, outlining the Budget proposals. Thus, the Minister’s Budget speech — in effect the ‘packaging’ — has come to be identified with the contents, i.e., the Budget itself. Many measures are touted to benefit the aam aadmi (the common man), a term that usually refers to the economically weaker sections of the society. A closer scrutiny will show that there are usually two sides to such measures.

Service improvements are reflected in the Budget speech as listings of new trains proposed to be introduced, services to be extended, new lines sanctioned, new surveys approved and so on, all of which have little relevance to the day-to-day experiences of the average rail user in terms of quality of service.

The paradox of new trains

It is common knowledge that introduction of new trains eats into available line capacity and leaves progressively less margin for absorbing any unforeseen disruptions to traffic, and for infrastructure maintenance.

While the introduction of new trains by itself is a passenger amenity in a broad sense and needs to be welcomed, this directly affects the Railways’ capacity to run trains on schedule and for normal maintenance of infrastructure. The resulting bunching of trains at major terminals affects actual on-time arrivals.

Thus a measure meant to relieve overcrowding in trains results in crowding of trains (bunching) at the terminal station, affecting the quality of service to aam aadmi on a daily basis.

Even the good news of a boost in earnings needs to be viewed with caution. Thus, for the year 2005-06, increase in freight earning to the extent of Rs 5,000 crore was attributed largely to the decision to load wagons beyond the marked carrying capacity. But the actual increase in earnings due to this measure (with questionable long-term implications for track, bridges and wagons) was only about half of the amount projected. The balance was essentially due to upward revisions of freight tariff by the method of reclassification of commodities (outside the Budget), a purely administrative measure, and not necessarily aam aadmi-friendly.

Tyranny of parcels

Paradoxically, even some visible manifestations of Railways’ improved financial performance have adverse impact on the quality of service. For example, in many major stations it is common to see mountains of parcels littering the passenger platforms, seriously impeding the access to and movement of passengers.

While the rapid growth in parcel traffic is in itself a welcome development financially, the fact that it causes serious impediment to passengers should not be lost sight of. Significantly, till date no Budget has spelt out a long-term strategy to isolate parcel traffic from passenger platforms and thus free the aam aadmi from the virtual “tyranny of the parcels”.

The announcement of ‘no increase’ in passenger fares is usually greeted with thunderous applause in Parliament and euphoric reactions outside. However, such happy news masks certain unfavourable facts of cross subsidisation. Analysis shows that the earnings/million tonnes of originating loading (termed ‘yield’) of various commodities have risen over the years. Yield is a function of the rate (tariff) and the lead or distance carried. The accompanying table shows the yield/million tonnes of originating loading of selected commodities over the last eight years.

It may be noted that except for petroleum products (POL) for which there has been an increase in lead along with the yield, in the case of other commodities, an increase in yield has been achieved despite a general levelling off or even a reduction of lead, clearly reflecting the effect of enhanced tariff. The contrast is particularly glaring in the case of foodgrains.

Thus, while on the one hand, passenger traffic is being subsidised by freight traffic, the boost in freight earnings is itself to a considerable extent due to periodic increases in tariff on items such as foodgrains, fertilisers, coal (mostly for power houses) and ‘other goods’ — items of concern to the aam aadmi, on the other.

Aside from its public service dimension, IR is essentially a commercial enterprise. Failure to recover costs in one area only leads to burdening another sector of the customer base or even the society at large.

Periodic increases in rates in line with rise in input costs are inevitable. Obfuscation of this basic economic reality creates for the aam aadmi, an illusion of ‘painless’ growth.

What also needs to be remembered is that, despite impressive strides in recent years on the financial and safety fronts, when compared to major world railways, the Indian Railways has a very long way to go in terms of quality of service and productivity. There are tremendous challenges to be overcome.

There is, therefore, no room for complacency, euphoria or misplaced munificence. In the ultimate analysis, there are no free lunches.

(The author is former Member, Staff, Railway Board. E-mail: balakesari@hotmail.com)

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