Features and Critical Analysis of the Railway Budget 2015-16
February 26, 2015
In his post budget interview, Railway minister Suresh Prabhu categorically described his budget as a “policy statement”.
In these pages in July 2014, we had pointed out about how over the years expedient politics reduced the status of Railway budgets to being merely an income and expenditure account of ministry than being a vision document. (Refer to Why does India have a separate Railway Budget). These budgets were largely relegated to the customary announcements of concessions for the ruling dispensation’s core constituencies – whether in form of introducing “unviable new trains, or fudging accounts to show surplus budget so as to accommodate un-remunerative projects, unviable schemes and cross subsidies”.
Obviously, any ruling dispensation found it difficult to resist the temptation of using the Railways as a milking cow to meet their own selfish motive and hence, over the years the Railway budgets were guided more by populism and political predelictions than economic prudence.
Little surprise therefore that not even about fifty per cent of such budget announcements could be accomplished in the past. Further, it cannot be a coincidence therefore that there have been eight railway ministers since March 2012.
It is against this backdrop that Railway minister Suresh Prabhu’s above statement and his maiden railway budget, that he presented in Lok Sabha on 26 February, need to be analysed.
Unlike the past railway budgets, Prabhu’s is not a big bang budget. The minister identifies chronic disinvestment as a fundamental reason for lack of improvement of facilities “which has led to congestion and over-utilization”. Hence, the minister avoided the temptation of introducing new trains (for which he came under the Opposition’s attack).
At the onset, the railway minister should be given the credit for making a marked departure from the past to present a budget with quantifiable targets for all stakeholders so as to “ not just make Indian railway “financially self sustainable” but also to enable it become more efficient through management and operational reforms. It is perhaps for the first time that any railway budget has offered a complete plan of action to make the Railways an instrument of development.
The vision seems clear — There are no major land acquisition issues involved in improving the existing high-density networks and the “emphasis would be on gauge conversion, doubling, tripling and electrification. Average speed will increase; trains will become more punctual.
Features of Budget 2015-16 :
. Dedicated freight corridors
. Lowering of the operating margin to 88% from 91% (which experts consider a very healthy sign)
. Improving Institutional and human resource capital
. Priority on improving capacity on the existing high-density networks. (It points out that improving capacity on existing networks is cheaper. There are no major land acquisition issues and completion time is shorter.
. Emphasis on gauge conversion, doubling, tripling and electrification so that average speed of trains increases and they become more punctual.
. Thrust on ensuring that Goods trains become timetabled.
. Interface with consumer by improving cleanliness, introducing 138 helpline and 182 toll free for security etc.
What though grabs the attention is the way Prabhu articulated his policy statement by fixing four goals, five drivers and eleven thrust areas.
The four goals were:
. To deliver a sustained and measurable improvement in customer experience
. To deliver a sustained and measurable improvement in customer experience
. To expand Bhartiya Rail’s capacity substantially and to modernise infrastructure
. To make Bhartiya Rail financially self-sustainable
The five drivers are:
. Adopting a medium-term perspective
. Building Partnerships
. Leveraging additional resources
. Revamping management practices, systems, processes, and re-tooling of human resources
. Setting standards for Governance and Transparency
Besides, the eleven thrust areas are – Quality of life in journeys; station redevelopment; capacity augmentation; safety; technology upgradation; partnerships for development; Improvements to Management Processes and Systems; Resource Mobilisation; Human Resources; Energy and Sustainability; Transparency and Governance initiatives.
The opposition though finds them a tall order. Consider how Prabhu’s predecessor in the same government, Sadanand Gowda, in the last railway budget had hinted hint at the corporatisation of the Railway but did not elaborate enough. His budget speech had emphasised on human safety and passenger amenities, but there was no target-setting. He had sought cabinet approval for the entry of foreign direct investment and declared that the bulk of the future projects would be by the public-private partnerships model. Yet, there was no emphasis on initiatives either that could bring revenue to the railways, and Gowda had dismissed the Dedicated Freight Corridor in just one sentence.
This time the road map is elaborate. Prabhu claims his goals are attainable. It is time that he ensures he implements his promises.
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