The Telegraph
Friday , February 14 , 2014
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The words, economic reform, do not even sound a distant bell in the echelons of the United Progressive Alliance government. It is biding time. One chore a lame duck government has to carry out is the presentation of a vote-on-account budget to meet the demands of routine expenditure, especially the payment of salaries of government employees, till a new sarkar is in place to present a substantive budget. Thus no one was quite expecting the interim railway budget to present anything startling or even remotely surprising. The only out-of-the-way proposal that was put forward by the railways minister, Mallikarjun Kharge, was the introduction of 72 new trains. A cynic would argue, with every justification, that even this is not too out of the way since most of these trains are on loss-making routes and will only add to accumulating losses and increasing deficit. This has been the trend of railway budgets presented by successive ministers. The financial health of Indian Railways has not been the primary concern of ministers. On the contrary, the railways have been used as a very convenient vehicle for populism.

The accounts show that for another year running the railways have incurred a loss. One reason for this is the inability of the railways to cut expenses. Railways earn substantial sums of money but these are eaten into the expenses. The fund guzzler is the payment of pension and dearness allowance. The logical step would be reduction in staff but, given the ambience of politics in India, that does not seem to be a viable option. The Indian Railways is thus in a tight squeeze since it cannot hike freight rates as that would lead to loss of market share compared to cargo movement by road. One alarming aspect is the dearth of money for safety and expansion of capacity. Given the increase in accidents, this is a cause for worry. It is obvious that the existing assets of Indian Railways are all ageing and need to be replaced if standards of safety are to be maintained. This obviously requires more investment, which does not look to be forthcoming. One prickly issue should perhaps be raised in conclusion: is it necessary for the railways ministry to present its own separate budget? Why can the plans and statement of accounts of the railways not be part of the Union budget? There is a need to think more radically about the railways.