Projected financial improvement in railwyas may not materialise: Dinesh Trivedi

By BHAVNA VIJ AURORA, ET Bureau | 21 Apr, 2015

NEW DELHI: Dinesh Trivedi dug deep into his brief but eventful experience as a railway minister to come out with a scathing report on the ministry, saying that a cohesive plan to put the organisation on the path to recovery was missing and the projected improvement in financial condition may not materialise.

Heading the Standing Committee on Railways, Trivedi tabled the report on Demands for Grants (2015-16) in Lok Sabha on Monday, cautioning the ministry against falling into a debt trap. The committee expressed concern over the fact that railways had failed to generate internal resources and were heavily dependent on Gross Budgetary Support (GBS) and borrowings and leasings.

Percentage of internal resource generation had successively fallen from 28.7 per cent in 2010-11 to 17.8 per cent in 2015-16. Borrowings on the other hand, had gone up from 23.9 per cent to 40.6 per cent in the same period.While railway finances were buttressed by GBS of 49.3 per cent in 2014-15, it estimated the amount to come down to 41.6 per cent in 2015-16.

The railway ministry informed the committee about the MoU signed with Life Insurance Corporation of India in March with a committed funding of assistance of Rs 1,50,000 crore over five years from 2015-16 to 2019-20. The railways had already tied up with World Bank and Japanese Bank for International Cooperation (JICA) for the Dedicated Freight  Corridor.

Cautioning the railways against falling into a debt trap, the committee said that the railways must study the bankability of projects "in minute detail" before implementing the financing model.

The report was preceded by tough grilling of the railway ministry with the Committee sending 40 questions regarding the financial condition of the organisation.

"The ministry dodged some questions, gave contradictory answers to others and tried to hoodwink the Committee in several places," Trivedi told ET after tabling the report. He termed the report as a "complete pathological report of the railways" that gave true picture of the ailing organisation.

According to him, Suresh Prabhu had set targets in the railway budget that were not realistic and unachievable. There was no basis for the targets as the earnings from both, passengers and freight  were showing a downward trend. Even in terms of number of passengers travelling, the railways had registered a negative growth.

 "In their replies, the railways have admitted that the originating passenger grew by 2.4 per cent in 2012-13, -0.3 per cent in 2013-14 and -2.12 per cent in 2014-15 (till February)," the report said, adding that it was expected to fall more sharply. Regarding freight, the earnings had gone down despite the railways carrying more load, registering a growth rate of 5 per cent.
Trivedi's report further rubbished railways' claim of improving its Operating Ratio (OR) from 91.8 per cent in 2014-15 to 88.5 per cent in 2015-16. "Based on unrealistic projections of total receipts, the improvement in OR is unlikely," the Committee said.

The House panel also expressed concern on the accumulated arrears on account of Depreciation Fund and Development Funds. There were huge arrears in replacement and renewals of over aged assets, endangering the rail passengers.  The committee said that even critical rail projects - linked to the defence sector - were inordinately delayed due to various reasons, mainly resource crunch.

Trivedi also questioned the much-acclaimed decision of the minister not to announce new trains and projects. "No new trains not a good idea. People living in remote, under-developed, tribal and hilly areas have been waiting for decades for a rail link. Their disenchantment and disappointment could lead to sense of alienation, and give rise to frustration and even extremist tendencies," was Trivedi's take on the issue.

The House panel recommended a National Policy on railways, "which should be the guiding force for the railways irrespective of the government in power."