Make railways profitable

By The New Indian Express    Published: 19th July 2016 

Given its critique of the institutional and governance framework created by decades of Congress rule, the NDA government has been keen on recasting it to suit the changing times. After scrapping the Planning Commission and instituting the NITI Aayog in its place, the government is now toying with the idea of merging railway and general budgets. In the case of policy think tank, NITI Aayog, the government had already made up its mind about changing the Nehruvian economic policy-making mechanism. So, there was no wider discussion and consultation. When it comes to the proposed merger of railway and general budgets, the government needs to study and think it through.

The process began with a recommendation by a NITI Aayog member and it was being followed up by seeking the railway ministry’s views. The Railway Minister reportedly concurred with the recommendation and cited two reasons in support of his view — one, insulate the railway budget from political pressures and two, facilitate evolution of an integrated transportation policy. Railway ministers in successive governments were accused of favouritism and playing to the gallery in announcing major development plans. Often these decisions were dictated more by narrow political considerations and less by economic pragmatism. Such decisions have only increased the financial distress of railways. The silo and compartmentalised approach to railways has also hampered the swift evolution of an integrated transportation policy, which is critical for implementing pan-Indian multimodal transportation system.

The issue of merging railway and general budgets should also be seen from the perspective of diminishing revenue contribution of the railways to the overall state exchequer and the general decline in its financial self-sufficiency. The real challenge will be in drawing up a long term plan to put the railways back on track of financial viability.