The Telegraph
Wednesday , February 27 , 2013
Since 1st March, 1999
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Bansal junks Mamata way, eyes ICU exit

Calcutta, Feb. 26: Pawan Kumar Bansal treaded a different track today as he tried to undo what some of his predecessors in the last few years had done when he rose to present the railway budget for 2013-14 with the objective of improving its finances.

Unlike some predecessors, especially Mamata Banerjee who presented three rail budgets from 2009 to 2011, Bansal was low on rhetoric and suggested his primary objective was to bring the railways out of the intensive care unit (ICU).

Dinesh Trivedi, sacked by Mamata for increasing fares last year, had said in his budget speech that the railways had slipped into the ICU in a reference to its financial situation.

Bansal, whose speech today lasted little more than an hour, also made it clear he wanted to end the practice — championed by Mamata — of the railways knocking on the Centre’s doors for higher budgetary support from time to time.

“For the first time in 25 years, railways did not present any supplementary demands for grants either in monsoon session or winter session of Parliament in 2012,” Bansal said.

“The railways were compelled to seek a special loan of Rs 3,000 crore from the ministry of finance during 2011-12. I am happy to report that the entire loan amount along with interest has been repaid in the current financial year,” the minister said, to applause from the treasury benches.

The approach was significantly different from that of Mamata, who never lost an opportunity to pick a fight with the finance minister or the Prime Minister for more allocation for the country’s biggest public enterprise that employs over 14 lakh people.

Senior railway ministry officials recounted how, to justify populist measures that did not pass the viability test, the Trinamul chief would argue that the railways had a social responsibility.

“Should commercial viability be the only criterion to judge…. Or should social responsibility be an important consideration? I prefer the latter,” Mamata had said in her 2010-11 budget speech.

Bansal’s ambition appears to be to see that Indian Railways can fend for itself instead of waiting for grants.

One indicator was the minister’s announcement that he would steer the railways towards achieving a better operating ratio of 88.8 per cent in the current financial year, compared to 94.9 per cent in 2011-12. The operating ratio target for 2013-14 is 87.8 per cent.

Operating ratio is the ratio of total working expenses to earnings and a higher operating ratio means the finances are getting stretched.

In her three budget speeches as railway minister, Mamata had never mentioned the operating ratio, a senior railway official recalled.

“During her tenure from May 26, 2009, to May 19, 2011, the ministry did very little to shore up its earnings. Plans to reduce expenditure and augment income had taken a beating as she was never interested in discussing financial nitty-gritty,” said a senior railway officer.

Railway officials said Mamata’s reluctance to pay attention to finances was one of the main reasons for the cash crunch Trivedi faced when he took over the ministry from her, till then finance minister Pranab Mukherjee bailed him out with a loan.

According to data available with the railways, fuel prices have gone up by 52 per cent and power tariff by 22 per cent in the last 10 years. Besides, salary to 14 lakh and pension to 12 lakh consumes around 52 per cent of the railways’ working expenditure after the new pay commission recommendations.

“But she kept on announcing industrial projects…. Most of them did not take off as there wasn’t enough planning to back them up with enough resource availability,” the official added.

Construction was yet to start for the power plant in Adra in Purulia, wagon component manufacturing unit at Jellingham, East Midnapore, a joint venture between SAIL and Burn Standard, an axle manufacturing unit at Kulti by SAIL and an EMU coach manufacturing factory at Kanchrapara, the official said.

“The new rail minister, however, did not announce so many projects…. He restricted himself to only nine and all of them had detailed plans,” an official said.

Several railway officials The Telegraph spoke to lauded Bansal’s decision to impose fuel surcharge in the form of fuel adjustment component (FAC), which will start with freight rates initially. Trivedi had suggested a similar component to raise earnings in his budget and Bansal did not miss out on the opportunity to refer to his “predecessor”.

“My learned predecessor had proposed to segregate fuel component in tariffs as FAC. As then suggested, I propose that this component be dynamic in nature,” Bansal said.

Bansal announced that Trivedi’s plan to set up an independent rail tariff authority was also being considered.

If Bansal’s budget has retained Trivedi’s footprints, it has tried to wipe clean Mamata’s. In the 2010-11 budget, she had linked railways with culture and promised to set up Shambhu Mitra Cultural Complex with performing arts and a music academy at Howrah. In the last financial year, the railway ministry had allocated Rs 5 crore for the project but this year there is no allocation.

“The railways is trying to cut unnecessary expenditures,” pointed out an official.