A comfortable ride

Railway Minister Lalu Prasad has delivered exceptional growth and a financial punch for the railways that deserve acclaim. What is additionally praiseworthy is that the national carrier has built its traffic-carrying capacity, and improved capacity utilisation, so that the marginally higher capacity has been able to carry much more. For example, the time it takes for a wagon to discharge its freight and reload has significantly improved. Having delivered the present, the minister has also turned his thoughts to the future, and has focused increasingly on modernisation, the use of new technology, the upgrade of services, and major investments so as to handle more traffic.

What is especially important is the way in which the railways have been able to keep control on costs and give the government a steadily improving return on its investment in the railways. Over the last five years, the operating ratio (amount of revenue that is eaten up by expenses) has been going down, from 92.1 per cent in 2003-04 to 76.4 per cent in the current year (2007-08), thus leaving much more by way of a surplus for fresh investment in capacity, new technology and passenger amenities. This is a praiseworthy performance, because net revenue to the capital at charge, which gives a measure of the return on investment, has gone up over the same period from 8 per cent to 20.9 per cent.

The picture changes somewhat when we look at the projections for the coming year (2008-09), because traffic growth is budgeted to slow and costs will increase quite sharply. The operating ratio, therefore, is projected to worsen somewhat sharply to 81.4 per cent, and the return on investment to drop to 15.8 per cent. The primary reasons appear to be the provision for a Pay Commission award, and the slower growth in traffic. In addition, there are the concessions given in the budget, which covers both passenger fares (now benchmarked by many against cheap air fares) and freight rates. The need to give passenger fare concessions a year ahead of elections is understandable, as is the need to use freight reductions to win back market share from road transport.

Some of the policy decisions announced in the budget are significant. Top priority will be given to improving rail connections to the ports, and there will be dedicated iron ore routes. It is these which deliver maximum bang for the buck and which have been traditionally neglected. A blueprint will be prepared for the railways' high density network and work will begin on the east and west freight corridors, which can write a new chapter of high efficiency and returns for the railways. There is also the promise of long-term planning. A Vision 2025 document will be prepared to evolve strategies that keep the customer and the market as the main focus. Also, a five-year information technology plan will be prepared to bring applications onto a common platform. To catch up with the times, passengers will be able to download e-tickets on the Internet, as can now be done with air tickets. This should help deliver the promise that queues before railway booking counters will be gone in two years.

If one had to look for areas where the railways can do better, it can make for a long list. The entire network of lines, the experiential quality of railway stations, the amenities they offer, the quality of passenger coaches, the level of service given to passengers "" all of these can and should improve by miles. In most parts of the country, the quality of rail service is still no better than it was two or three decades back. As incomes rise in a rapidly growing economy, passenger expectations also change, and the need today is for fast inter-city trains, much greater freight train speeds and the touch and feel of a modern, customer-oriented corporation, rather than a government department. Lalu Prasad has used his five budgets to revive the system, point the railways in the right direction, and start the train on its journey; it still has miles to go.