Railways goes downhill again

Source : BUSINESS_STANDARD
By : Business Standard
Last Updated: Thu, Sep 06, 2012 20:05 hrs

For the Indian Railways, the chickens are already coming home to roost, even though more than half the financial year still lies ahead. The national carrier has undertaken to cut investment expenditure across the board to make up for a revenue shortfall of over Rs 3,000 crore. This is mainly the result of current Railway Minister Mukul Roy rolling back key fare revisions announced in the Railway Budget. His predecessor, Dinesh Trivedi, had to step down and pay the price for defying his party leader, Mamata Banerjee, by revising fares, which had not been changed in years. In the process his efforts to turn the Railways around were nullified, and his successor has put the Railways firmly back on the path of inexorable decline.

The change in direction can be seen in the figures. In keeping with his positive approach and the desire to bring about systemic improvement, Mr Trivedi had raised Plan allocation by as much as 28 per cent in his Budget. This has now been cut by five per cent. This may not be the last and final cut; as the financial year draws to a close, the shortfall may become acute even after this cut. In the revised estimates for the last financial year, the Railways had shown a miserable operating ratio of 95 per cent, a high in recent history. This meant that as much as Rs 95 of every Rs 100 revenue was taken away to meet operating expenses, thus leaving little to fund much-needed investment. The Budget had ambitiously sought to improve this ratio by over six percentage points. But the way things are going, that seems unlikely, and the Railways might end the current year with an even worse operating ratio than it did last year.

The expenditure cuts are as high at 18 per cent in the depreciation reserve fund, which is used to carry out the critical task of track renewals. Arrears in track renewal had been drastically reduced; they are likely to pile up again. This has serious safety implications. Running trains on tracks that are overage is asking for trouble. Another area of cut is electrification, by eight per cent. This is an important benchmark that is looked at to see how fast the Railways is modernising. That is not all. Even relatively small amounts set aside for important heads like signalling have not been spared. This means saying goodbye to any hope of increasing capacity. The Railways has gone from being the engine of India’s growth to holding it back. Mr Roy cannot be allowed to push it into decline; the prime minister needs to intervene.




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