G Raghuraman: Welcome focus on freight

Lalu Prasad has brought in quite a few initiatives. This is perhaps the first Budget that has set a target to bring down the wagon turnaround time to five days, though "in the near future", it said.

What is required is to bring in a culture of viewing freight service on offer as being from "an origin to a destination", rather than just "originating" traffic.

The rationalisation of commodity categories from 4,000 to 80 is welcome, though the question "" why not even fewer "" still remains. In fact, the real issue affecting the customer here are the freight rate classes, which many of his predecessors had brought down to 27.

This Budget has brought it down further to 19. It makes sense to bring down the commodity categories to 19, and then to one (freight all kinds, like in the container business), and make pricing more dynamic.

All other modes of freight (road, ship, and air) operate in this manner.

The revision in priority classes for wagon allotment has been simplified, starting with defence movement, emergency relief movement, traffic sponsored by Central government agencies, approved programmed traffic, and all else.

While it is not clear what "traffic sponsored by Central government agencies" is, it is expected that the market will seek to make more of the traffic as programmed traffic, thus improving the logistical reliability.

The increased focus on engine on load (EOL) is desirable. The more the culture that the engine is subservient to the customer's traffic, the better it is for the Indian Railways.

The idea of EOL has been made more flexible and attractive to the customer, with free engine time being increased by one hour.

It is significant that the railways would be willing to share the investment cost of private sidings, in lieu of traffic commitment. The concept of cash incentives to freight customers for infrastructural investments that reduce terminal detentions is a good move (though the quantum of the incentive is not clear).

A focused examination of freight trains and wagons at specific locations, which would be upgraded in quality, is a good step. The maintenance-free run being extended up to 6,000 km (from the current 4,000/ 5,000 km, depending on the type of wagon) will improve efficiency.

All the above indicate an approach with a systems perspective.

Apart from freight movement, the systems perspective is also visible in the manner in which work plan (routine) investments are being considered.

A change has been brought to examine such investment on a route-wise basis, with the objective of throughput enhancement, cutting across railway zones.

The populist part of the Budget, if any, is the announcements of trains. It beats me, though, why such an activity should take away the valuable time of Parliament.

It ought to be more routine demand-oriented decisions. While one may see no hike in freight and passenger tariffs as populist, I would have pushed it further for reduction in freights.

Reduction in freight tariffs and making them more responsive and dynamic to local market conditions is a step urgently called for, not just to increase the railways' market share, but to avoid a macro economic distortion of the economy's investments going towards the more expensive road mode rather than rail.

A significant desideratum in the Budget is the absence of any mention of organisational reforms, except accounting reforms.

Quick and imperative reforms are needed to focus on hinterland-port connectivity by breaking the Container Corporation of India monopoly, de-caderisation of the senior echelons of the Indian Railways management to enable a corporate perspective, and separating the roles of licensing, regulation, and operations to provide a platform for more public-private partnerships.

(The author is professor, IIM, Ahmedabad and member of the Rakesh Mohan Committee)