Railway Minister Mamata Banerjee has perhaps unwittingly raised the bar for herself for the coming Budget by unveiling a vision for the railways for the next 10 years which borders on the grandiose. If the railways’ share of GDP is to rise from the present 1.18 per cent to 3 per cent, then the extra effort has to begin now. Ms Banerjee, as is her wont, has asked for a massive rise in budgetary support for the railway plan, by as much as five times the annual average of what was offered in the last five years, to fulfil the vision of rapid growth. But the Union finance minister has lost no time in bringing her down to earth, clearly indicating that the sharp rise in investments will have to be substantially funded by the railways themselves. Thus, the pressure will be on the railway minister to show that for its part the organisation has put in an extra effort to generate a higher surplus, thus creating the moral ground for demanding more form the general pool of resources. The benchmarks for this are clear. The operating ratio for the railways has sharply deteriorated from the last boom year, 2007-08, going up (expenses eating up more of revenue) from 75.9 per cent that year to 92.5 per cent in the budget estimates for the current year. Now that the slowdown is over and the economy is clearly returning to the earlier trend growth path of 8 per cent, the onus will be on the railways and its minister to slowly return to the earlier ratios. In fact, “better than the best” should be the motto but since the wages of a new Pay Commission will have to be borne, achieving the earlier ratios will be creditable enough.
To get there, the minister should unambiguously raise passenger fares, which have stagnated for years and so added to the deficit that the rest of the organisation has had to bear. But since there is no signal so far that this will be done, the burden will have to be carried by freight earnings. The marketing people in the organisation will have to continue with what they have been successfully doing in recent years, incentivising higher freight offerings through attractive discounts and flexible tariffs. Ms Banerjee should focus on ensuring zero accidents and create a road map for it. Ms Banerjee has invested time and energy in creating a vision for the railways and in improving management systems. She has some good ideas that deserve implementation. Reports from West Bengal indicate that she is changing her old agitational ways and officials in Rail Bhavan are happy that she listens to them quite a bit. She should use her prime time Parliament speech to reveal to the nation a bit more of her rational self which she has so far chosen to hide from the public.
