Challenges before Indian Railways in 2015-16!

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By M.Y.Siddiqui

When the Union Minister of Railways Suresh Prabhu presents his maiden rail budget 2015-16 in Parliament on February 26, 2015, he will have several challenges to meet. The major challenge would be to enhance rail capacity and de-bottleneck the rail network. Another important challenge would be removal of capacity constraints due to lack of investment.

At present, Indian Railways have throw-forward projects of Rs.182, 224 crore as in April 2014. According to official sources, Railways require Rs.50,000 crore yearly for the next ten years to complete all the ongoing projects.

The other challenge would be to find resources for augmenting rail infrastructure capacity and its modernization programme given the fact that there has been a drastic cut in the Annual Plan size on account of downturn in the economy. For example, the Annual Plan 2012-13 size of Rs.60, 100 crore was reduced by Rs.9, 717 crore to peg it at Rs.50, 3830 crore at the Revised Estimates. So was the Annual Plan 2013-14 size of Rs.63, 363 crore reduced by Rs.10,011 crore to Rs.53,353 crore. According to the Railway Board sources, major areas of shortfall were on account of external and internal budgetary resources. To meet the shortfall in earnings, the railways increased passenger fare by 14.2 per cent and freight rate by 6.5 per cent effective from June 25, 2014. Yet in the current fiscal year 2014-15, the shortfall in earnings is in the region of over Rs.28, 000 crore.

In the 2015-16 rail budget, the chances of raising fare and freight are little in view of the fact that the total estimated fuel cost of Rs.35,046 crore of which estimated cost of Diesel traction being Rs.24,220 crore would be down sized following considerable reduction in Diesel costs.

Expanding the ambit of resource mobilization would be another major challenge before the Minister of Railways as there has been lukewarm or little response of investment in this technology intensive behemoth from the much-touted Public Private Partnership (PPP) and 100 per cent Foreign Direct Investment (FDI) modules. The existing resources of railways come through Gross Budgetary Support and Extra Budgetary Support from the General Exchequer, earnings from passenger, freight and sundry services, and market borrowings through Indian Railways Finance Corporation (IRFC).               There is thinking in the Ministry of Railways to expand the scope of resource mobilization by tapping profit making infrastructural Central Public Sector Undertakings under an institutional umbrella of a Special Purpose Vehicle (SPV) for additional resources mobilization. Besides, the Government has to find resources and technology for the already announced bullet train between Mumbai and Ahmadabad as also for nine routes picked up for high speed.

The other challenges expected to be met would include strengthening of railways’ Lucknow based research and development unit, known as Research, Design and Standards Organisation (RDSO) for faster modernization of Indian Railways in tune with the global market economy, expediting completion of the Dedicated Freight Corridor between Delhi-Mumbai and Delhi-Kolkata by maintaining current completion schedule of 2018 and 2019 respectively, adoption of Link Hoffman Busch (LHB) coach technology to all types of coaches for safer, efficient and faster rail services to the nation, recasting the Railway Board from its current three-in-one role to policy making and implementing apex body as per the recommendations of Vivek Debroy Committee to make it economically viable with attendant deliverables in order to provide well integrated coordinated mechanism to maximize productivity of Indian Railways. Presently, the organizational structure of Railway Board discharges the role of policy framer, operator and regulator.

The 2015-16 rail budget is also expected to throw light on implementation of Anil Kakodkar Report on improving railway safety measures and Sam Pitroda Committee Report on Modernisation for efficient, speedy and safe rail services, besides recommendations of various committees and taskforces that Suresh Prabhu set up to reorient Indian Railways to the market economy.

Since Suresh Prabhu took over as Minister of Railways, he has made all the noises for reorienting Indian Railways to the market economy verging on Privatisation without making it formally a private entity. Let us hope, he takes measures for increasing freight earnings now that economy is upswing as well as he maintains the existing balance between financial viability and social responsibility of the railways.

Indian Railways consist of 65,436 route kilometers of tracks that criss-cross the country with 20,038 trains transporting 23 million passengers and hauling 2.77 million ones of freight daily, thereby contributing to country’s economic growth and promoting national integration!

 

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