Rail budget 2013: Railways skips reforms signal

Last Updated: Wed, Feb 27, 2013 05:09 hrs

The poll-bound United Progressive Alliance on Tuesday presented a railway budget that lacked long-term vision to mend the deteriorating finances of the Indian Railways, provide adequate funds for development or renewal of assets and make it more efficient.

In his first budget, Railway Minister Pawan Kumar Bansal raised freight tariff by almost six per cent, further undermining its competitive edge vis-a-vis the roads sector, and refused to raise basic passenger fares because these were increased last month, though he upped reservation charges, supplementary charges for superfast trains and cancellation charges.

Bansal has, thus, relied on railway ministers' time-tested formula of leaving basic passenger fares untouched and relying on freight to fill coffers. The plan to de-politicise tariff fixation by entrusting the work to an independent rail tariff authority has also remained in cold storage.
  • 87.8% Operating ratio for 2013-14 projected to be better than this year’s 88.8%
  • Tariff authority The plan to set up an independent body remains in cold storage
  • 152,000 Concerted efforts to be made to fill a large number of vacancies
  • Rs 63,363 cr Plan spend for next year up 21%, but development fund outlay cut
That the railway budget was written with next year's general elections in view became amply clear when Bansal promised efforts to fill up approximately 152,000 vacancies this year. This could increase the Railways' headcount of 1.4 million by almost 11 per cent.

The Railways' poor finances were evident from the revised numbers Bansal presented for the current financial year. The revised Plan outlay of Rs 52,265 crore for the current year represented a sharp cut from the earlier Budget estimate of Rs 60,100 crore.

For the next year, however, Bansal tried to make amends by proposing a total Plan size of Rs 63,363 crore, the financing of which would come from gross budgetary support of Rs 26,000 crore, Railway Safety Fund of Rs 2,000 crore, internal resources of Rs 14,260 crore, market borrowing of Rs 15,103 crore and Rs 6,000 crore through public-private partnerships (PPPs).

Given the track record of such ventures, it isn't clear how this money would be raised. During the 12th Five-year Plan, the Railways plans to raise Rs 100,000 crore through PPPs. This, Bansal said, was a challenge, given the "capital-intensive, long-gestation nature of rail infrastructure projects and the limited success achieved so far".

Further evidence of the Railways' poor finances was seen in the fall in passenger earnings (by almost 10 per cent) and freight earnings (by around four per cent), compared with the target for 2012-13. As a result, gross traffic receipts of Rs 125,680 crore were 5.18 per cent less than the target. On the expenditure side, the appropriation to pension fund went up to Rs 20,000 crore from the earlier estimate of Rs 18,500 crore.

The Railways responded by cutting the depreciation fund from the targeted Rs 9,500 crore to Rs 7,000 crore and paying lower dividend (Rs 5,314 crore, as against the projected Rs 6,650 crore). That left a surplus of only Rs 10,409 crore (well below the earlier estimate of Rs 15,557 crore), which was used up to meet the requirement for the Railway Development Fund and Capital Fund. This, in effect, meant a record Rs 7,948-crore shortfall in provisions for depreciation and development outlay.

The weakness in traffic receipts was reflected in the operating ratio (working expenses as a ratio of traffic receipts). At 88.8 per cent in the current year, it was below 94.9 per cent in 2011-12, but higher than the target of 84.9 per cent. The operating ratio for 2013-14 was projected at 87.8 per cent.

In 2013-14, gross traffic receipts are expected to grow over 14 per cent from those in 2012-13, to Rs 143,742 crore. In expenditure, the pension liability is budgeted to rise to Rs 22,000 crore. However, for the depreciation fund, Bansal has set aside only Rs 7,500 crore, less than the Rs 9,500 crore first earmarked for 2012-13. As a result, the excess of receipts over expenditure would be Rs 13,146 crore, below the 2012-13 target of Rs 15,557 crore. The money set aside for the Railway Development Fund in 2013-14 is Rs 3,550 crore (2012-13 target: Rs 10,557 crore) and for the Capital Fund is Rs 5,443 crore (2012-13 target: Rs 5,000 crore). The money left, Rs 4.163 crore, would be transferred to the Railway Liability Reserve Fund.

Bansal said 67 new express trains would be introduced in 2013-14 (75 in 2012-13), 26 new passenger services would be started (21 in 2012-13), run of 57 trains would be extended (39 in 2012-13) and frequency of 24 trains would be increased (23 in 2012-13). The target for new lines in 2012-13 was scaled down from 700 km to 470 km, while that for gauge conversion was cut from 800 km to 575 km, though the target of 700 km for doubling is expected to be marginally exceeded. The targets for new lines, gauge conversion and doubling for 2013-14 have been kept at 500 km, 450 km and 750 km, respectively.

Jammu & Kashmir, on a boil ever since Afzal Guru was hanged on February 9, was told that the Udhampur-Srinagar-Baramulla project would be taken up on priority, a survey would be done to link Anantnag and Pahalgam and the minister would pursue for approval a project to connect Bilaspur in Himachal Pradesh to Leh via Manali and another from Jammu to Poonch via Akhnoor.

Rae Bareli, UPA Chairperson Sonia Gandhi's constituency in Uttar Pradesh, will get a new forged wheel factory. The railway track from Rae Bareli to Amethi, Rahul Gandhi's constituency, would be doubled, Bansal, the MP from Chandigarh who read out the names of South Indian cities with visible difficulty, said.

As expected, the Opposition slammed the budget for "increasing the burden on the common man", with the Bharatiya Janata Party terming it "pedestrian" and "discriminatory" while the Left said it did not give any hope on the Railways' future.

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