Business Standard

Running down the railways

Should Bengal worry about Ms Banerjee's track record?

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Business Standard New Delhi

On the face of it, the railway budget points to an improvement in the operating performance of the organisation in the current year (2010-11), compared to the previous year, with the operating ratio improving by over three percentage points to 92.1. This is still below what was achieved under her predecessor Lalu Prasad, but a slight turnaround nevertheless. However, even this has been wrought at a long term cost to the organisation. Appropriation to the depreciation reserve fund, from which track renewal takes place to secure the safety of rail traffic, has been cut by a fourth in the revised estimates compared to budgetary estimates. Disastrous as last year’s results were, they would have been even poorer if the balances in the various railway funds were not run down by over Rs 10,000 crore. What is worse is that in the current year they have been run down further by another Rs 2,000 crore and what must mark a nadir is that in the budget estimates for the next year (2011-12) they are planned to be drawn down even further by another Rs 1,700 crore. Thus the improvement in the operating ratio depicted over the two-year period 2010-12 is quite hollow.

 

It is also difficult to take the revised figures with certainty in view of what happened last year (2009-10) when the actual gross traffic receipts fell short of the revised figures by a good Rs 1400 crore. Even if ‘actuals’ do not let ‘revised’ down, the topline growth has little to recommend itself. Total receipts are set to go up by 9 per cent in a year when nominal GDP is set to go up by 16 per cent. What is more, since the transport sector grows faster than GDP, by 1.25 times, railway revenue should have gone up faster than nominal GDP. As the railways offer concessional rates to bulk and essential commodities, tonnage carried (net tonne km) instead of revenue can be considered. Even by that measure, the growth in the first ten months of the current year is a paltry under 4 per cent when real GDP is set to grow in the whole year by 8.6 per cent. Clearly, the railways are continuing to lose market share.

At a time when the infrastructure deficit of the economy is being highlighted by one and all, running down the railways’ physical assets by neglecting adequate replenishment, instead of building them up, needs condemning in the strongest possible terms. Under four different heads of repairs and maintenance, the actual amount spent in the current year (revised estimates) is down from the actual amounts spent in the previous year. This is reflected in physical targets and achievements. In terms of two vital physical parameters — route kilometers electrified and length of tracks renewed —the revised target or achievement is lower than the actual achievement in the previous year. Only construction of new lines is far in excess of what was achieved in the previous year. This underlines the political agenda of railway minister Mamata Banerjee: distribute goodies to all and sundry, including West Bengal where she faces a key election, without safeguarding the long term health of the railways. But should West Bengal worry about Ms Banerjee’s administrative abilities? Will she revive the fortunes of this hapless state, or derail them further, like the railways?

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First Published: Feb 28 2011 | 12:08 AM IST

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