Friday, February 23, 2018

FRONTLINE -R Elangovan



Jaitley’s Budget offers little to railway passengers or businesses and is marked by a singular failure to address the deep faults in the system that have a critical bearing on safety. By R. ELANGOVAN

HAVING deprived the Railway Minister of the task of formulating a budget for the Indian Railways, Finance Minister Arun Jaitley has failed to put his money where his mouth is. The allocations for this critical infrastructure are not just meagre but irresponsible given the spate of rail accidents in recent months. Jaitley made much of the fact that he has allocated Rs.1.46 lakh crore for investment in the Railways; but as is the case with the rest of his Budget, this is too little given the scale of the government’s plan for India’s largest public undertaking.

Soon after the Narendra Modi government assumed office, it unveiled an investment plan aimed at modernising the rail system. It proposed investments to the tune of Rs.8.56 lakh crore over a five-year period, implying an average annual investment of Rs.1.71 lakh crore. In the first four years of this plan, starting in 2015-16, the proposed cumulative outlay has been Rs.4.98 lakh crore, implying a shortfall of Rs.1.86 lakh crore. Even more outrageously, the actual outlays in each of the first three years was lower than what was initially “allocated” in the respective budgets. The reality was that in the first three years, actual allocations were short of initial plan allocations by a whopping one-third.

There are two kinds of problems plaguing Jaitley’s approach. The first is the mix of resources that the government planned—hoped would be a better word—to mobilise in order to fund the plan. For instance, resources from public-private partnerships (PPPs), which were expected to account for 15 per cent of the investments, have failed miserably to meet expectations in each year.

But even more importantly, and for which Jaitley is directly responsible, especially after hijacking the Railway Budget from the Railway Minister, inadequate budgetary support has sunk this investment programme. The original investment plan envisaged budgetary support to the extent of 30 per cent, that is, an average of Rs.51,200 crore a year (a total of Rs.2.56 lakh crore over five years). In the first three years the average shortfall in allocation was 20 per cent; in 2017-18, for instance, he budgeted for Rs.55,000 crore but revised it to Rs.40,000 crore, a shortfall of more than 27 per cent. In keeping with his approach in the rest of the Budget, he has projected a budgetary outlay of Rs.53,060 crore.

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