Union Railway Minister Dinesh Trivedi has, by both what he has done and by what he has chosen not to do, worsened the immediate future of the organisation whose well-being has been entrusted to him. In trying to prepare the groundwork for presenting a respectable budget for 2012-13, he has raised freight rates for major items by between 20 and 25 per cent. This is not all. He has also clearly indicated that passenger fares will not be raised for the time being. The need to do the latter has been virtually universally voiced, the latest by the parliamentary consultative committee for the railways. What is good for the Indian Railways (IR), currently in very poor financial and physical shape, is as well-known as it is simple: go easy on freight rates which make money, and raise passenger fares which do not — and have not been touched for years.
The latest action will instead cause IR to continue to flounder by making its own operations more inefficient; it will become easier for road transport to keep taking away market share. Further, since rail transportation is considered more efficient for a large country like India, which has to carry across long distances bulk items like coal, iron ore and foodgrain, undermining the health of the railways will lower the overall efficiency of the economy and its global competitiveness.
Mr Trivedi has made no attempt to hide the identity of the person who is behind the decision not to raise passenger fares. His party leader and predecessor at Rail Bhavan, Trinamool Congress chief Mamata Banerjee, has ensured by remote control that the populist policy that was her hallmark continues to prevail. Mr Trivedi’s action a few days before the presentation of the railway budget has also raised anew the question as to whether it is necessary or useful to continue with the practice of presenting a separate budget for the national carrier. A budget is meant to outline policy, announce key financial decisions and present annual accounts. With key decisions already announced and policy direction clear, the budget speech will only allow the minister to hold the attention of the nation for an hour or two which will most likely be used to announce new passenger trains to curry favour with different parts of the country. As Ms Banerjee has already made clear her national ambitions by taking her Trinamool Congress to Manipur, where it is now the main opposition, the budget speech may well come to represent what she perceives to be good for her ambitions rather than the well-being of the country. However, the railway minister’s action can have one positive fallout. It can prompt the petroleum and natural gas minister, Jaipal Reddy, to bite the bullet and announce a price rise where it is really needed, for diesel. This will keep IR's freight competitive with trucking, and will benefit the economy in the long term.
