Tuesday, October 20, 2015

When Suresh Prabhu took over the mantle of Railway Minister, many thought that his last name is ironic, only God can save the Indian Railways, the largest Public Sector Undertaking from coming to a grinding halt in the near future. Utter lack of application of commercial principles to the functioning of Railways for decades has led to the financial mess that stares Prabhu in the face. His first task was to ensure that Indian Railways was no longer used for politicking. So he stayed away from the populist impulse of announcing new projects and trains in his maiden Budget. Instead, the focus was on capital expenditure. Share of railway capex (as proportion of development expenditure of government) has remained at less than 2 per cent. As share of GDP, China has incurred 3 times more capex on railways than India. Prabhu has managed to tie up with the Life Insurance Corporation of India to secure funding worth Rs 1.5 lakh crore over the next five-year period. And he is in the process of clinching a debt-deal of Rs 1.95 lakh crore from the World Bank. In his maiden railway Budget presented earlier in the year, Prabhu had laid out a five-year capital investment plan of Rs 8.6 lakh crore. Prabhu is the only railway minister who has laid out a five year investment-led vision for Indian Railways and did not announce even a single new project during his Budget speech. Whatever may be the buzz around a possible Cabinet reshuffle after the Bihar elections or dropping of some key names from the Union Cabinet list of ministers, Railway Minister Suresh Prabhu appears to be going strong. For Prabhu, October 11, 2015 was perhaps a very important day in his short stint as a Union Cabinet Minister in the Modi Government. It is on this date that the Prime Minister Narendra Modi publically praised Prabhu for doing ‘good work’. The comments could not have come at a more appropriate time. Because in late August, the Prime Minister’s Office had sent a letter to the railway ministry seeking explanation on the “less than satisfactory performance” of the ministry. Speaking at a function in Mumbai on October 11, Modi had said: “Suresh Prabhuji has also done really great work in railways." This statement and later on several tweets in favour of Prabhu by the PM has had a positive effect. While Prabhu’s critics will again have to find some ammunition to tackle him, currently the railway minister is going from strength to strength. Today (October 20, 2015), Prabhu is in Singapore. He will be addressing a gathering of investors at the Infrastructure Finance Summit organised by World Bank in association with the Government of Singapore. Few weeks back, Prabhu was on a week-long tour of Japan and South Korea to explore collaborations of overseas companies with Indian Railways. Foreign tours and trips aside, Prabhu has got work to show for his time as the railway minister. From setting in motion the railway station redevelopment plan to awarding port connectivity projects to finding investors for stalled locomotive manufacturing units in Bihar, Indian Railways under Prabhu’s leadership has been buzzing with activities. To take the world’s 4th largest transport network back on track, Prabhu is trying to revive the Public-Private Partnerships or the PPP model. The minister’s initiative of revamping PPP contracts which balances risk-reward sharing between private players and railways is a good start. It was under Prabhu’s stewardship that the capital expenditure to decongest projects went up by 20 per cent to Rs 6,880 crore in the first six month period of the current fiscal year (2015-2016). In terms of showing the work-in-progress, there are around 80 projects (worth Rs 90,000 crore) that are expected to be commissioned before March 31, 2016. These projects will help decongest around two dozen saturated corridors, a move towards improving the efficiency of the Indian Railways. Under Prabhu’s leadership, there is also activity on the long-standing infrastructure project managed by the Dedicated Freight Corridor Corporation (DFCC). Between November 2014 and October 2015, DFCC has finalised contracts worth Rs 17,500 crore. A similar amount worth of contracts are also expected to be awarded in the balance five months of 2015-2016. Compare this to the 2005-2013 period when a total of less than Rs 13,000 crore worth of contracts were awarded on this crucial dedicated freight corridor which will decongest the existing railway network of freight trains. Prabhu has also managed to set in motion activity in the two locomotive manufacturing projects that were gathering dust for the past seven years. Located in Bihar, both these factories have been bid out to foreign investors who are expected to put in around Rs 3,000 crore as equity. Then around a dozen and half port connectivity projects are under various stages of implementation with the combined projects worth Rs 12,000 crore. The Cabinet has also given its go ahead on the railway station modernisation and redevelopment of around 400 railway station. Prabhu is yet to complete a year in office, given the legacy issues of Indian Railways, even the legendary Hercules would have excused himself from the onerous task of getting the behemoth back on track. Suresh Prabhu has at least made a move in the right direction; to balance the social obligations of India’s life line with the need for revenue generation.

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