Rail Budget 2015: Only a sustained reforms push can drive railways out of the red

Rail Budget 2015 will be as crucial to the Indian railways as to the BJP in the light of the jolt the party received in the recent Delhi assembly election. The former chartered accountant and Shiv Sena man will have to assert the government’s stated intention to pursue reforms to lift Indian railways out of its morass while keeping the interests of ordinary passengers in mind.

The rail budget tends to deliver sops to various pressure groups. This tendency leads to unrealistic freight/fare pricing and financially unsustainable services. Moreover, railway ministers traditionally have short-lived tenures. They often move on before the budget begins to manifest itself on the ground. As a result, planning for the future takes a backseat. Virtually every rail budget sees a confused minister laying out long-gestation plans. He is out of Rail Bhavan before the plans fructify. In Prabhu’s case, that will hopefully not be the scenario. He has roped in several luminaries in the field of planning, infrastructure and transport as heads of various committees. They have repeatedly articulated the simple truth that the railways need massive financial support to turn into a truly effective, cheap and all-weather mass transport system.

The meagre gross budgetary support (GBS) and limitations in augmenting internal resources will spell doom for this transport behemoth, which operates with a highly congested and creaking infrastructure. However, the railways continue to be the country’s 24x7 lifeline. Many argue that unclean linen, unpalatable food and stinking toilets are all acceptable as long as the low-priced services get passengers to their destination day in and day out, with of course the predictable delays. Prabhu would do well to make a clean break from the past. He has set up a plethora of committees to resurrect the railways. He has also gradually expanded his secretariat and edged out officers who are otherwise meant to man the ministry.

Prabhu would perhaps have figured out by now that there is more to the rail budget than mere oratory. Every statement in it calls for a blueprint because every promise has to be backed up with substantial allocations, but without the luxury of deficit financing that the finance minister has. Having collected the wisdom of a host of committees, Prabhu has to measure up to high expectations. His party in particular will be banking upon him to reverse the effect of the deleterious AAP blow to Narendra Modi’s aura of invincibility.

If Prabhu comes up with a clear, reforms-oriented rail budget aimed at helping the railways leapfrog into a new era of professionalism and pragmatism, his effort would go down as a job well done. Any attempt to put old wine in new bottles with schemes that run counter to the overall paradigm of reforms will be tantamount to shooting in the dark. Prabhu will need to do a balancing act: bring in FDI to modernise the railways while ensuring better services for the common user. Cosmetic changes and convenient sops do not cost much but that would not strengthen the core. Only meaningful organisational reforms can enthuse investors to feel confident about participating in rail projects of longer gestation periods, and also improve the overall quality of service to the point where rail users would not mind shelling out a little extra for a ride. That is the direction in which Suresh Prabhu should guide Indian railways.