Getting Railways on track

That it took 69 years after Independence for India to merge the Railway Budget with the Union Budget is an indication of how difficult it can be to junk colonial-era traditions that may have outlived their utility. In 1924, when the first Railway Budget was presented, the Railways entailed more funds than India’s expenditure on all other aspects of administration combined. So it made sense to present a separate Budget. That equation changed long ago, and now the Railways’ outlay is just 6 per cent of the total expenditure proposed in the Union Budget for this year. In fact, revenues from the domestic aviation business are more than the Railways’ traffic earnings. Nearly Rs.2.5 lakh crore has been planned this year as defence expenditure, but it found little mention in the Finance Minister’s Budget speech. Yet, the ritual of the Rail Budget has continued even as the economy opened up over the past 25 years. A key reason that it lingered so long is India’s fractured polity and the tendency of coalition partners to demand Railways as a juicy portfolio with its possibilities for populist posturing and patronage. With the luxury of a majority in the Lok Sabha and a Railway Minister like Suresh Prabhu who has refused to use the Rail Budget as a launchpad for new trains and railway lines, the NDA has thrown its weight behind a plan that takes away the annual temptation to make the Railways a vote-magnet.

India’s annual economic jamboree will now be over in two days — the tabling of the Economic Survey followed by the Union Budget — instead of three. Railway Ministers will no longer need to conjure up fancy and often regurgitated promises about new, improved services for passengers without charging them the operational costs of reaching their destination. The pressure to hold commuter fares has skewed the Railways’ freight rates, year after year. Indeed, the change is already being felt; tweaking of tariffs outside the Budget has begun. Consider the changes in coal freight and the introduction of flexible pricing on premium passenger trains. However, the Centre needs to now seriously consider setting up an independent tariff regulator to depoliticise fares. New lines and trains should be determined by economic viability rather than the constituencies covered. Initiatives such as demand-driven clone trains must be deployed to boost earnings, and the Rs.37,000-crore tab on social obligations, including concessional ticketing, must be borne by the exchequer. The Railways’ accounts need to be cleaned up and made bankable. Scrapping the Rail Budget is a good starting point to fix the fading utility. Bringing it back safely on track will take a lot more doing, and undoing.