Rail Budget 2016: Sustaining the reform track

As the saying goes, “Well begun is half done”. And minister for railways Suresh Prabhu’s first Rail Budget was a clear indication of the pragmatic path he was going to follow. Making the train journey of an average passenger a more pleasant experience, starting with ease of booking a ticket, providing clean bed linen for overnight journeys, giving him/her a choice of meals, and finally to enable him/her to reach safely in time, was one of Mr Prabhu’s priorities.

In view of the substantial inputs made in the area of passenger facilities, perhaps time is now ripe for valued customers to shell out more. Hopefully the proposed railway regulator will address the issue of the long overdue tariff hike. Crucial for reducing freight subsidy to passenger services, it would prevent further increase in freight tariff which has resulted in the railways losing to the road sector.

The recent derailment of four coaches of Bengaluru-bound Island Express at Natrampalli in Tamil Nadu, followed by 3 coaches of Awadh-Assam express derailing at Mirapur on Muzaffarpur-Hajipur section has exposed deficiency in the vital area of safety. A more proactive approach, such as carrying out an extensive safety audit may be considered. In addition, nearly 11,000 unmanned level crossings still remain potential safety hazards for road users for which trials of a number of automatic warning systems have been on for some time now. Hopefully,

Mr Prabhu would be in a position to reveal details of long-term inputs, including the all important time frame in which he proposes to overcome this problem.
Punctuality of passenger trains is still around 83 per cent. Though capacity augmentation of high density corridors may somewhat help to improve this, Mr Prabhu may have to take some steps like introducing a system to make up time at intermediate stations.

The projected Rs 85 crore increment over the previous year’s freight earnings as mentioned in the last budget may not materialise, and new areas of revenue have to be explored. An estimated Rs 1000 billion worth parcel business and transport of white goods is waiting to be tapped which can boost earnings.

Undoubtedly, Mr Prabhu will be putting his best team to design not only new parcel vans with twice the existing capacity, but also some aggressive marketing to wean it away from the road sector. Export of locomotives, coaches, wheel sets, springs, diesel loco components, etc, from its six production units which had been so far been channelised through RITES, is proposed to be put into high gear, in order to shore up the bottom line.

Invitation to set up private freight terminals (PFT) has seen good response with almost 400 applications, of which 30 are already operational. Some more policy tweaking based on feedback from clients may be made to make it a success.
Staff costs are almost half the annual working expenses of Rs 1.62 lakh crore and, following the adage “Cut your coat to suit the cloth”, Mr Prabhu may try reducing it by proposing some measures like installing Last Vehicle Device — a common feature on all US railroads — to eliminate guards from goods trains, who could then be better utilised on new passenger trains.

The Seventh Pay Commission’s award is going to set back the railways already stressed finances by Rs 32,000 crore. Reportedly, the ministry of finance is not inclined to agree to Mr Prabhu’s request to foot the bill, though it may ultimately agree to bail out the railways with its earnings from spectrum auctions. In all probability, this year too, Mr Prabhu will stick to his pragmatic approach which will ensure that the nation’s engine of growth stays on course to recovery!