2012 – A tough year for cash strapped Indian Railways.

Cash-strapped railways faced a tough year financially which was compounded by indecisions and policy delays as the national transporter witnessed four ministerial changes because of political compulsions.

While the Railway Ministry came to the Congress fold after a gap of about a decade-and-a-half after the withdrawal of Trinamool Congress support to UPA, the government looks set for a hike in passenger fares, which had remained stagnant over the years.

The railways witnessed a widening gap between operational cost and passenger earnings while freight revenue also fell below the target in 2012. Railways earned Rs 67,879.95 crore till October as against the target of Rs 70,147.74 crore, 3.23 per cent less than the budgeted provision.

In view of this shortfall, the plan outlay for the current fiscal has been downgraded from Rs 60,100 crore to Rs 55,881 crore.

Currently, the railways have 347 ongoing projects for new lines, gauge conversion and doubling but shortage of funds has forced curtailing of allocations for majority of them.

The year witnessed commissioning of the much-delayed Rae Bareli coach factory. Besides the factory, the railways also announced setting up of a wheel factory at Congress President Sonia Gandhi’s constituency.

The year began with Railway Minister Dinesh Trivedi proposing about 15 per cent passenger fare hike in the Rail Budget. However, it was rolled back as Trivedi drew the wrath of Trinamool supremo Mamata Banerjee.

Trivedi was aiming to mop up about Rs 4000 crore from the fare hike. He was, however, replaced by Banerjee loyalist Mukul Roy, who remained mostly absent from the ministry and ran the key infrastructure department for nearly seven months from Kolkata.

Though many West Bengal-centric projects including Kanchrapara rail factory, beautification of stations and opening of passenger reservation centres in the state were initiated during Roy’s regime, the much-needed move to hike passenger tariff was put in the back-burner.

After the withdrawal of Trinamool support in September, Congress’ C P Joshi was given additional charge of the ministry for about a month. His brief tenure saw the revival of the proposal for setting up of Rail Tariff Authority (RTA) to suggest tariff hike in passenger and freight rates.

Pawan Kumar Bansal, who became the fourth minister in a year to occupy the Rail Bhavan, has been giving ample hints of raising the fares realising the dire financial needs of the national transporter.

“If passenger fares will be hiked then it will not be for the sake of raising fares, it will be done to improve passenger amenities,” he had said after taking over in October.

Both ministers of State for Railways – Adhir Ranjan Chowdhury and K J Suryaparakash Reddy – have also strongly advocated raising of passenger fares to generate funds.

Reviewing the performance, Prime Minister Manmohan Singh has asked the railways to expedite the process of setting up the Rail Tariff Authority.

Singh has also asked the ministry to finalise bidding documents for two big ticket projects – locomotive factories at Madhepura and Marhora in Bihar.

Though seven routes have been identified for undertaking feasibility survey for running bullet trains at 300 kms per hour speed, the Mumbai-Ahmedabad route is to be taken up by the railways as a priority.


Railways invites states to share costs of rail projects

A cash strapped Railways, has given a “standing invitation” to all states to share costs of Rail projects which states may consider “essential” but which the Railways considers “unremunerative”. Bansal who was bombarded with questions in the Rajya Sabha over the inordinate delay in completion of Railway projects, first reminded MPs over the “vociferous demands” made by them for new projects and how it was financially difficult for the Railways to cope up with them and deliver results. A frank Railways minister thereafter praised Opposition ruled Karnataka for coming forward and sharing the cost of Rail projects with the Centre. The minister then urged that states “should bear the cost of land and 50 per cent of the total cost of construction.”

Interestingly, Congress has taken charge of the Railways portfolio after a long period of 16 years. A fact that Samajwadi Party MP, Naresh Aggarwal stated while congratulating the new Railway minister saying “after a long time of captivity (the ministry) has finally been unshackled”, in an obvious hint to the ministry having become a hostage to the whims of political parties and coalition partners like the TMC and prior to that the RJD.

Pawan Bansal, who appears to have already started taking stock of pending rail projects and how to expedite them, then added that he had already “written a good many letters to some of the Chief Ministers, requesting them that in such cases, they should bear the cost of land and 50 per cent of the total cost construction.” In a recent step, Haryana had come forward for offering to share the cost of one project. Taking this cue, Bansal went onto to urge Congress ruled Rajasthan to follow Haryana’s example. Responding to the repeated complaints by an MP from the state, Bansal in turn urged him to “persuade the Government of Rajasthan to share the cost that way.”

A prudent Rail minister sensing the political compulsions of state governments for whom certain local projects assume immense significance but which translate into little financial viability or commercial logic for the Railways ministry, seems to have found a mid path between the two.

His proposal urging states to come on board and bear the cost of land and 50 per cent of the costs, would thereby help in meeting both the needs of the state government as well as of the cash strapped ministry.
The Railways at present requires Rs 1,47,187 crore for 347 projects under three categories — new lines, gauge conversion and doubling according to the minister.