Suresh Prabhu has come to the railways with a considerable reputation for professionalism and efficiency and at first sight his first Budget, for 2015-16, will only enhance that reputation. The task of turning around the railways and making them a catalyst for overall economic growth cannot be done in a day or year and Mr Prabhu, in his Budget speech, has spoken in terms of a five-year perspective. But he has indicated that he means business by scoring some kind of a first. He has not announced any new passenger trains! Some may be announced during the session, but no recent railway minister has avoided the temptation of a crowd-pleasing announcement in the Budget.
The railways have been able to project a clear improvement in financial health, which builds on the betterment that has already taken place in the current year. Expenditure has been kept under check, revenues have maintained reasonable growth and the year-end surplus will be higher than even what was budgeted for at the start of the year. The operating efficiency (the percentage of earnings accounted for by operating expenses - the lower it is the better) has, thus, improved from an alarming 93.6 per cent in 2013-14 to 91.8 per cent in the revised estimates for the current year (2014-15), which is also an improvement on the 92.4 per cent that the Budget had projected. The estimates for the coming year (2015-16) propose to take this forward further to 88.5 per cent. This will still be far behind the high-water mark of 75.9 per cent achieved under Lalu Prasad in 2007-08. The problem is that this is sought to be achieved without raising passenger fares; and freight rates have been revised under the cloak of rationalisation. Given that fuel prices have fallen, the railways will be rendered further uncompetitive versus trucks.
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The improvement in finances has enabled the minister to make higher provisions for the depreciation reserve fund, up Rs 1,050 crore to Rs 7,900 crore, which funds crucial maintenance tasks like track renewal, whose backlog poses a safety hazard. The provision for the railway development fund, which takes care of smaller expenses that help de-bottleneck and increase capacity, has been raised from the revised estimate by as much as over four times to Rs 5,750 crore. But perhaps the most dramatic is the projected increase in the Plan size by over 50 per cent to Rs 1 lakh crore. This is vital if the railways are to raise capacity and earnings in order to start regaining market share, though the scale seems very ambitious. A lot will hinge on the ability to float bonds and conclude public-private-partnership deals. Many new initiatives have been promised to acquire new technology, innovate and use information technology to achieve greater transparency and efficiency. The green angle has been addressed by outlining new solar power capacity of a massive 1,000 megawatts. And while addressing the issue of creating a tariff regulator, Mr Prabhu has gone one step further by visualising an entity that will look at performance standards while fixing tariffs and also adjudicating in disputes with the new private partners who will hopefully come in.
