Having effected increases amounting to 14.2 per cent in passenger fares and 6.5 per cent in freight tariff last month, Railway Minister D.V. Sadananda Gowda had very little to do in his maiden budget. His presentation was full of ideas and policy formulations, but lacked concrete proposals or a vision or road map to take the Indian Railways forward. What became clear even before the budget presentation was that the Railways was in poor financial health, and a course correction was imperative as the operating ratio was precarious. In short, the Railways had to spend 94 paise for every rupee earned, leaving a surplus of just six paise. The system cannot afford the huge doses of investment required to complete ongoing projects, leave alone initiating new ones. Mr. Gowda says the Railways needs Rs.5 lakh crore over the next 10 years to complete just the ongoing projects. As outlined in the President’s address to Parliament, the Diamond Quadrilateral Network of High Speed Rail system connecting major metros and growth centres was announced, but with a mere Rs.100 crore earmarked for initiating the project. He also unveiled the longer-term plan to introduce bullet trains, with the Mumbai-Ahmedabad route taking the lead. While the bullet trains will require completely new infrastructure, the high-speed train can make do with upgrading the existing network to allow speeds between 160 and 200 kmph.

The budget focusses clearly on passenger amenities, cleanliness, safety and security. The upgradation of the computerised reservation system should be a welcome step to cope with the increasing load on the online booking facility. Similarly, pilot projects to provide Wi-Fi at stations and on select trains, at a cost, may be useful to the business traveller. Continuing with the populist trend of announcing new trains, Mr. Gowda has offered five Jansadharan, five premium, six air-conditioned, 27 express and eight passenger trains of different frequencies. The annual plan outlay has been kept at a reasonable Rs.47,650 crore, but the welcome development is limiting market borrowings to Rs.11,790 crore. The freight traffic target for the current year has been set at 1,101 million tonnes. The budget was expected to signal the road to reforms and the opening up of the Railways to private investment. With hardly any progress till now on this front, the Minister has decided to seek Cabinet approval for Foreign Direct Investment in the Railways. An open invitation to the corporate sector to invest in PPP projects will not by itself go very far without concrete proposals for land utilisation, or the development of major stations on the lines of airport terminals. The markets, which expected some major policy announcements, were obviously disappointed, and went south even as Mr. Gowda finished his budget speech.

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