Railways slip on upgradation

REALITY CHECK PART IV

In December 2002, Prime Minister Atal Bihari Vajpayee had launched the Rail Vikas Yojana, the Railways equivalent of the Golden Quadrilateral project for the highways sector.

Sixteen months later, the Railways are yet to set a date for the completion of the project, or award any contracts. A Rs 150 crore bond issue to raise the first tranche of funds for the Rs 8,000 crore project, which was slated to hit the market in February this year, has also been postponed.

The National Democratic Alliance government's record in the railway sector, one which has the strongest linkages with the rest of the economy, is far from impressive.

Both the present Railway Minister Nitish Kumar in his first term (1999-2001) and Mamata Banerjee later (2001-2003) had very little to offer in terms of developing the sector.

To pre-empt a hike in rail fares, Banerjee had in 2001 announced a projected Rs 700 crore in annual revenue from Railtel Corporation, which she had set up to provide optical fibre connectivity across the country, using the Railways' right of way.

However, three years down the line, few of the national long-distance telephony players have evinced interest in it. The Railways now run an Internet kiosk at the New Delhi railway station, and some of their signalling systems have been upgraded to use a small portion of the bandwidth.

The equity structure of the company is still to be firmed up as Mahanagar Telephone Nigam Ltd, which was offered 34 per cent, has shown no enthusiasm despite a Cabinet decision on this.

The enthusiasm to set up new public sector units has marked the tenure of both Nitish Kumar and Mamata Banerjee. This was an attempt to deflect the pressure mounted by the Rakesh Mohan Committee, the Planning Commission and recently the Asian Development Bank to corporatise the Railways.

Instead of privatising non-essential operations, Kumar has hived off the catering business to set up the omnibus Indian Railway Catering and Tourism Corporation.

The company offers catering services on major trains, online ticket booking and runs two bottled water plants and is now getting into the business of running food plazas at large stations. This has allowed the minister to move about 30,000 rail employees to the company without having to retrench them.

The Railways have also got into the power generation business and is setting up a 1,000 mega-watt power plant in Nitish Kumar's constituency, to offer uninterrupted power supply to its 62,000-km network of across the country.

Experts say that except for adding to the overall generation capacity in the country, the project will not help the Railways as there will be heavy transmission losses above a distance of 500 km.

At the same time, the share of the Railways in total freight traffic is slipping even below 40 per cent. A large percentage of bulk traffic like petroleum and cement have moved to pipelines or roads.

The ambitious freight rationalisation exercise launched in 2003-04 has not yielded results as earnings from haulage have declined to Rs 27,115 crore from Rs 27, 815 crore last year. Also, upper class passengers are finding air travel more economical.

While operation ratios have begun to improve, the Railways are having to bear the high cost of the Konkan Railway Corporation, which is bleeding it of Rs 300 crore annually.

It owes Rs 2,300 crore in dividend arrears to the exchequer and its payment to its pension fund at Rs 6,090 crore, is way below the minimum annual replenishment requirements.

The significant successes that the Railways have notched up in the past five years are in the high-visibility areas, including improvement in ticket booking, especially through the Internet.

The introduction of advance unreserved ticket booking is also a step in the right direction as over 90 per cent of the daily 1.3 million rail passengers travel unreserved.

To reduce the summer rush, the railways have introduced a daily train capacity tracker, that has kept waiting lists at the minimum.