Railways getting derailed

On Feb 25, 2011 when Railway minister Mamta Banarjee rose in the parliament to start her railway speech, the whole country was watching it with lots of hope and expectations. By the end of the speech it was evident that It is nothing more than a populist budget. General public would be happy to know the fact that there in once again no increase in fairs (both general and freight). Along with that there are few routine additions of trains, some got extended routes and few got the daily run in place of bi-weekly or tri-weekly. Everything was on the expected lines as it was highly influenced by the coming West Bangal’s state assembly elections. She had to take that factor at the top of everything and no matter who comes in next as the minister (Its very likely that She has a good chance of winning the election and she would go to state politics).

Having said that, there certain issues that needed real attention that the minister has failed to do. It has been 7 years since the general fair has not been touched. This being a very sensitive and politically motivated thing, it was never an easy for any of the Railway minister to do so. Nitish Kumar was the last one who dared to do so to make sure that It does not get out of the track. With a account deficit of almost 2,500 Crores for the current year, It was very important to have some long term plans so that it come out of this mess and we are better prepared for long term. In last one year, operating expenses has increased from 75% to almost 95%, however the minister has claimed that its still around 84%. Never the less, the way things are going on, I am sure next year, railway will once again go to net losses. Above that, as an institution, the railway has its own problems. There have been quite a few management issues in the recent past and even the minister is considered and criticized by media being more close to West Bangal focusing on state election than on railways. She was lucky enough to get rid of it due to our coalition politics.

In long term, railways need a revamp as far as infrastructure is concerned. Unlike this year, we always have fright charges going up and it adds to the inflation that too indirectly to the common man. Railways is banking on the fact that there are many routes where there are no other options than railways as a transportation mode. So no matter whatever the charges they would put, no one is going to question till the time it is adding the value in top and bottom line of the balance sheet. But, now when revenues are almost stagnant and expenses are going high like anything, one has to look into this more closely and come with some short of solution so that in long term, railways could be sustainable. Also, on the infrastructure side, since 1950, we have been able to add just 12,000 kilometers of the expansion to make it a net of 62,000 km. I am afraid its too too little in this much long period.

Having stated the issues, there are few things that railways can do in near future. Someone has to go out there and look for a complete over hall of it for the betterment of everyone in long term. With a profit margin of 30% no financial institution will be shy away to provide the funding for its expansion. Also, to make sure that it is not going to mess once again like it did prior to Nitish Kumar tenure, the government has to look at it closely and take some concrete actions so that its back on track. Major issue with railways is, whatever initiative you take, it takes sometime to get visible and this is one of the reasons, political parties do not get motivated to go and take the bold steps. BUT the time has come to see the long term view and take some hard steps. Its better to have some pain rather being perished. I hope some one in the government is having the same view and we will see some action on this after the Bangal elections.