|The track less taken|
|Tuesday, 24 January 2012 00:00|
At this time of the year, Rail Bhavan and Yojana Bhavan stare down each other to see who blinks first. The Planning Commission, which clears the budgetary support for the Railways, wants a firm commitment that passenger fares, left untouched for the past five years, will be raised to generate matching internal resources, while the rail ministry is equally adamant opposing it. In the process, railway passenger fares now account for only 28.7% of its total traffic receipts. The passenger fare-to-freight ratio for Indian railways is 0.3:1, compared to 1.3:1 for China and 1.5:1 for Germany, showing the extent to which freight is subsidising passengers. In the process, the percentage of freight traffic carried by it to that by roadways has slipped badly. A Planning Commission study estimates that for a GDP growth rate of 9% the growth in railway freight has to be about 10%. For the past two fiscals, the Railways has underperformed on this score, growing at only 4.59%. The Sam Pitroda committee on rail modernisation has, therefore, made a pertinent suggestion to hike passenger fares by 25% to mobilise an additional R37,500 crore in the Rail Budget 2012-13. While the final report is still some months away, these figures are reported to have emerged in the discussion with the Planning Commission (bit.ly/A8OnIQ). The committee has also suggested the annual plan support by the government to be raised to R70,000 crore. This is a 158% rise over the gross budgetary support for the entire 11th Plan. To ask the government to finance this must be tied with an explicit roadmap from the ministry on the reforms envisaged. But, at another level, even if the Railways plays an honest broker, does it have the ability to absorb these levels of finances?
It is obvious by now that the Railways cannot move further ahead without carving out more than one key corporation from it, one to run the fleet and the other to maintain and expand the tracks. In the absence of such creative solutions, the revenue-raising arm of the ministry, the Indian Railway Finance Corporation that has already leased up to 74% of the rolling stock of the Railways (till this fiscal), is rapidly running out of headroom to bankroll its borrowing (bit.ly/vZldBO). The numbers for investment drawn up by the Pitroda panel are impressive, the problem is how the Railways plans to get around getting those funds.