Lesser known facts about the Railway Budget 2015

All of us have read enough about the railway budget. So I thought of presenting the information in a different format and with lesser known facts. Hope this helps.

The Issue – First and foremost we have to analyze the issue – the problem of Indian Railways. Each of us has commuted by Indian railways sometime or the other. Can we recall our experience during our train journey? The common points would be (a) poor and unhygienic railway stations (b) shabby and stinking couches (c) delayed arrival and departure and so on. None of us may have had any great pleasant experience of Indian railways. Having said that, all of us would love to travel through railways provided the overall quality of service improves. Am I right?

Exactly! The Railway minister, through this budget made an attempt to address these issues. In order to address these problems, all of us know that sufficient resources (money) are required. Let’s read what the RM said

“Unfortunately, Railway facilities have not improved very substantially over the past few decades. A fundamental reason for this is the chronic underinvestment in Railways, which has led to congestion and over-utilization. As a consequence, capacity augmentation suffers, safety is challenged and the quality of service delivery declines, leading to poor morale, reduced efficiency, sub-optimal freight and passenger traffic and fewer financial resources. This again feeds the vicious cycle of under-investment”

The over-utilization causes poor maintenance. On a single track, the Indian Railways have to run fast express trains like Rajdhani and Shatabdi, ordinary slow passenger trains as well as goods trains.Is it surprising that though Rajdhani and Shatabdi are capable of doing 130 km/hour, the average speed does not exceed 70 km/hr?

So, what is he focusing on?

He is focusing on two issues (a) to augment the revenue (b) quality of service. The measures proposed to achieve these twin objectives are as under –

• There are over 490 sections running at full capacity (100%). (Action by RM – trying to add more capacity so that railways can get additional revenue. Improving capacity on existing networks is cheaper. There are no major land acquisition issues and completion time is shorter.)

• Freight account for over 65% of revenue of railways. Additional income from freight will enhance the profitability of railways. (Action by RM – trying to extend the route by partnering with PSUs to ensure that sufficient capacity is built to transport critical commodities like coal, iron ore, and cement, etc., from where they are extracted or imported to where they are consumed or processed)

• What other means possible to get more funds to develop railways? Approach multilateral banks and pension funds. They can park funds for a long term at railways. Railways can repay this amount later, say after 10-20 years, but give predictable and recurring revenue through the issuance of long-term debt instruments.

• Increase the speed of trains – The emphasis will be on gauge conversion, doubling, tripling and electrification. Average speed will increase. Trains will become more punctual. Goods trains can be time tabled

• Railway Stations – Partner with private sector to improve to improve the last mile connectivity and modernize station infrastructure.

• Creating Housing Keeping department – Integrated cleaning will be taken up as a specialized activity, which will include engaging professional agencies and also training the railways staff in the latest cleaning practices.

• Other initiatives includes but not limited to on-board housing keeping services, building bio-toilets, vacuum toilets, better bed linen management, 24/7 help-line facility, new ticketing facility, catering facility, integrated customer portal, SMS alert, surveillance, onboard entertainment, etc.

• Traffic facility– Traffic facility works like construction of longer loops, creating smaller block sections, building by-pass lines, making crossing stations, augmenting terminals and removing permanent speed restrictions is of utmost priority. These are small expenditure works but they provide huge operating benefits in a short time to de-bottleneck and create additional capacity

• Reduce empty flow of wagons– In an effort to reduce empty flows of wagons, an Automatic Freight Rebate Scheme for traffic loaded in Traditional Empty Flow Direction has been launched in October 2014 as a pilot project on NF Railway and Southern Railway. Now it will be launched on an all-India basis.

• Upgrading manufacturing facility, increasing the capacity, enhancing the productivity, setting up JV or Special Purchase Vehicle (SPV) with the state governments, improving the management process, delegation of powers, simplifying the rules and regulars, etc are some of the other measures mentioned in the budget.

To sum up, the railway budget is done with twin objectives in mind – (a) resource mobilization and (b) quality customer service. When we go through the financials of railways, we realize their financial strain. Given this proposition, don’t you think it is fair and just to clean up the mess?

Makes sense, doesn’t it?

I will write about the financials of railways in the subsequent article. Hope this article is helpful. Please leave your comments.

Thought for the day

Train yourself to let go of everything you fear to lose.

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