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CII calls for a visionary Railway Budget

On the eve of the Railway Budget 2001-02, the Confederation of Indian Industry, in a media release issued on Saturday, outlining a list of suggestions for the Railway Budget 2001-02, hoped that the Railway Ministry would present a growth oriented, pragmatic and visionary railway budget.

According to CII, in view of the precarious finances of Indian Railways and in particular the continuous loss of market share of railways in the over all transport network, there are no options for the railways left but to undertake restructuring to focus on corporatisation, commercialisation, privatisation to ensure functioning of railways on commercial lines and curtailing cross-subsidisation.

According to CII, one of the major areas of concern was the constant deterioration of the railways' financial health.

While the share of railways in the total Plan Outlay had come down to 5.3 per cent in the ninth plan from 7.6 per cent in the Seventh Plan, the operating ratio, which represents the percentage ratio of working expenses to gross revenue, has reached an unsustainable level of 98.80 per cent during 2000-2001.

This had resulted in almost zero surplus to plough back for investment and development. The situation has been further aggravated with scarce resources being locked into many un-remunerative projects.

It has been estimated that ongoing projects in this category are worth about Rs 300 billion, which are neither yielding additional freight nor increased passenger movements, but only adding to the financial woes of the railways.

CII also stressed on major upgradation of existing railways infrastructure, particularly in terms of conversion of single lines and complete electrification. While on the one hand a major portion of the total route kms are single line, covering 47,068 route kms or 75.3 per cent of the total route, on the other, despite the introduction of electrification in Indian Railways way back in 1925, merely 21.9 per cent route kms have been electrified till now.

It was an irony that over the years the railways contribution to GDP, instead of growing, has shrunk from 2 per cent in 1960 to 1 per cent 1998.

In this backdrop CII stressed that the unveiling of new, bold, pragmatic and visionary initiatives are crucial to enable the railways gain its rightful share in the transport sector.

To achieve this objective one of the major steps that CII hoped from the Railway Budget, therefore, was the clear agenda for Railways restructuring. Railways should corporatise its five production units and later convert them into joint ventures to ensure competitiveness and induction of latest technology, which, CII believes, would not only bring the much needed efficiency but also garner resources.

Underlining the other steps that the railways needs to take, CII felt that the current budget should address the issue of cross-subsidisation which has been highlighted time and again.

At present, the railways heavily subsidises passenger fares with the subsidy amount in 1999 being Rs 41.65 billion, up from Rs 14.62 billion in 1990 -- an increase of 185 per cent.

Such massive scale of subsidisation of passenger fares by overcharging certain categories of freights mitigates rationality and leads to diversion of traffic to the roads. This, CII emphasised, is absolutely unsustainable and a clear road map must be chalked out to phase this out within a fixed time frame.

The freight rates have been increased in every budget and that has badly affected the competitiveness of railways vis-à-vis road transport.

Freight rates in India are considered among the highest in the world. The high freight rates coupled with the lack of operational flexibility, absence of door to door services, high cost of operation and increased cross-subsidisation are fast eroding the railways competitiveness.

The share of railways in the over all transport has drastically come down from 88 per cent in 1950 to 40 per cent in 1998.

CII hopes that the current budget would address the issue of cross-subsidisation and raise the passenger fares and resist from increasing the freight rates and thereby further arrest the slippages in the railways share in the transport.

The other issues in terms of increasing freight traffic that CII hoped from this budget to be addressed were unfurling several new measures such as decentralisation of powers to zonal railways, extension of shadow routes, liberalisation of the volume discount schemes, getting the roll-on-roll-off services on the fast track, running of high speed goods train, and introduction of door to door service, capacity augmentation on high density corridors, track renewal, telecommunications and signaling systems.

The railway budget, CII stated, must give priority to safety and implement specific measures to ensure safety in the rail transport. In view of increasing incidence of accidents, there is an imminent need to introduce new safety measures and in this connection CII strongly advocated the strengthening of the accident investigation process and action taken reports.

Populism seen influencing Railway Budget
Budget 2001

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