People's Democracy

Basudeb Acharya

THE railway budget for the year 2001-2002 presented by the railway minister has reflected the serious financial crisis the railways are facing. No attempt has been made to overcome the crisis; rather the crisis will be accentuated in the coming year. The Indian Railways are already in the red.

The contours of the crisis have been built up during the last few years. The costs are rising by 18 per cent, whereas revenues by only 13 per cent. Since it is operating over 100 per cent capacity, the railway funds have become totally depleted. Dividend payment to the general exchequer is deferred to the tune of Rs 3000 crore, and there are high interest and leasing charges of Rs 3500 crore. All these developments are leading to a debt trap. Indian Railways which were once the biggest employer in our country have been turned into a sick undertaking. There has been inadequate funding of the depreciation fund which is at present Rs 2704 crore, 40 per cent short of the requirement. This will result in heavy accumulation of arrears of renewals and replacement, reduction of over Rs 700 crore in expenditure on essential works like doubling of track, traffic facilities, safety works and track renewals.

Performance in the current year is also dismal. Although the target is to carry 475 million tonnes of freight traffic, the railways carried only 390 million tonnes up to January 2001. It is quite impossible to carry an additional 85 million tonnes of traffic during the remaining part of the financial year (February and March).

The parliamentary standing committee of the ministry of railways, in its first report (1999-2000), has commented that the current financial position of the railways has not been reflected in the budget for the year 2000-2001. The committee felt that the railways should have been asked for the payment of dividend in full, which would have resulted in a shortfall of Rs 329.69 crore in the budget. It is only after deferring the dividend payment of Rs 1500 crore that the railways reflected a surplus of Rs 1176.31 crore. Thus the surplus which has been shown in the current year's budget is not actually surplus, rather there is a shortfall in the budget. No serious attempt has been made to improve the performance of the railways; instead it has deteriorated. This is mainly because of the wrong policies which have been pursued for the last two years.

There has been a persistent demand that the railways should increase their market share. Today Indian Railways carry 35 per cent of freight traffic and 20 per cent of passenger traffic. In 1950-51 it was just the reverse. Last year when the railway minister presented her budget, she pledged to increase the market share of the railways but during the year the market share of the railways has rather been reduced. The question is whether the Indian Railways are not in a position to carry more freight and passenger traffic, and whether the fare and freight hike is inevitable.

The freight rate of Indian Railways is the highest in the world. Any increase in freight rate will be counter-productive. There is no proposal for fare hike in the next year's budget, on account of the coming assembly elections in West Bengal, but freight rate has been increased by 2 per cent on coal and steel and 3 per cent on all other commodities. Coal is the bulk traffic of Indian Railways. It is 60 per cent of the railways' traffic. Already the freight rate on coal being on the higher side, an additional increase in freight will have an impact on the coal prices. There is a crisis in the steel sector. The increase in the freight on steel will have an adverse affect of the industry. Thus the railways will not be able to reverse the trend in respect of its market share.

In the history of the railway budget, for the first time no new project has been announced. The reason that has been stated is that there are a large number of pending projects which are to be completed. How much funds are required for completion of these projects? It is about Rs 30000 crore. How much has been allocated in the budget? It is only Rs 803.90 crore. How many years will we have to wait to complete all these projects?

In 1947 when we achieved independence we had 53,000 km of railway track, and during the 53 years after independence another 10,000 km of railway track have been added. Now we have 63,000 km of railway track. What is the percentage of growth? To compare with China, they had only 11,000 km of railway track in 1949 but now they have 67,000 km of railway lines. We are carrying 450 million tonnes of freight traffic. Chinese Railways carry more than 1000 million tonnes of freight traffic. Chinese Railways plan to construct 5,000 km of railway track during the current five year plan whereas our target for the ninth five year plan is only 819 km. For the next year, Indian Railways have fixed the target to construct only 82 km of railway line. What has been achieved in the first three years of the ninth five year plan is 410 km. If we add 82 km that are projected for the next two years, the total achievement will be 492 km. Is it possible to construct 327 km in the terminal year of the ninth five year plan? It is impossible to achieve the target of 819 km of new lines during the ninth plan. Thus the capacity of the Indian Railways will not be increased by the end of the ninth plan.

There is a need to expand the railway network. There are many areas not connected by railway lines, while this is urgently required. Unless there are railway lines in these areas, there can be no industrialisation. Railways are the most important and vital infrastructure. But this aspect has been completely ignored by the railway minister and she is bent upon converting this vital undertaking into an inefficient one. There is no rationale behind not taking up any new projects in respect of construction of new lines.

There are a number of sections which have become over-saturated. There is a need to increase the line capacity. In order to achieve this, the ninth plan fixed the target of 2,000 km for doubling the track during the plan period. But what is the achievement during first three years of the plan? It was only 640 km. If we add another 200 km for the next year the achievement after the fourth year of the plan will be only 840 km. The railways will not be able to achieve even 50 per cent of the target for capacity addition that has been fixed for the ninth plan.

Another vital area is replacement and renewal. The railway reforms committee recommended sufficient allocation for depreciation reserve fund. This fund is meant for replacement and renewal. Rs 2441 crore were allocated for the depreciation reserve fund last year. The revised budget takes it further down to Rs 2171 crore. Allocation for 2001-2002 is a mere Rs 2704 crore, that is less than 7 per cent of income. It was 14 per cent in 1993-94.

Indian Railways have a backlog of more than 18,000 km of over-aged track which is required to be replaced urgently. But the target for track renewal is only 3,400 km. This backlog of track renewal will also have an adverse impact on the Indian Railways’ efficiency. In future there will be more speed restrictions. We will also have more derailments because of rail fractures. The railways accident review committee, under the chairmanship of Justice H R Khanna, submitted its report long back, and it is gathering dust in the Railway Board. The committee recommended an investment of Rs 15,000 crore within a span of 7 years for replacement, renewal and modernisation. No action has been taken in this regard.

Efficient operation of the railway system depends mainly on signalling system. Sufficient attention has not been given in regard to its modernisation. We have different types of signalling system, including the age-old signalling system. But there is no fund to induct modern technology in order to modernise the system. If that is done, there is a scope for increasing the efficiency of the railways. But that aspect has been completely ignored by the railway minister.

The minister has announced 24 new trains. But the number of coaches to be acquired has been reduced. In the year 2000-2001, the target for coach acquisition is 2079 whereas for the next year it is only 1752. It is much less than what was achieved during 1999-2000. In the case of locomotives, both diesel and electric, the targets have been slashed. If we have fewer locomotives, fewer coaches and fewer wagons, how will the railways be able to achieve 500 million tonnes of freight traffic and how can 24 new trains be introduced? A large number of coaches are over-aged. They need replacement. Thus there will be more accidents, and more derailments due to mechanical failure. The average speed of a goods train of Indian Railways is only 26 km per hour and of passenger train, only 52 km per hour. If we can increase the speed by only 10 km an hour, our railways’ carrying capacity can increase substantially. But unless over-aged rolling-stock and over-aged tracks are renewed and replaced, there is little scope for improvement in efficiency.

The government of India has reduced its budgetary support to the railways. It was 75 per cent during the first five year plan but came down to mere 15 per cent in the eighth plan and increased to 23 per cent in the ninth plan. That too is not sufficient. The railways are gradually coming to depend on market borrowings. The annual plan for the year 2001-2002 has been fixed at Rs 11,090 crore. This is no increase over the current year's plan in real terms. Rs 4000 crore are expected to come from market borrowings and Rs 3,550 crore through a combination of conventional sources and non-traditional sources of revenue. Thus the railways will depend more on market borrowings than internal resource generation. Most of the railway funds, namely the depreciation reserve fund, development fund and pension fund, have depleted.

While, ordinarily, the railways will have had to shell out a combined dividend of Rs 4435.57 crore for these two years, actual payment will, however, be only Rs 1935.57 crore. The remaining Rs 2500 crore have been transferred to a separate "deferred dividend liability account." But the railways have not been able to leverage these huge savings on dividend payment to boost its internal resource generation position. The internal resource generation component in financing the plan has gone down in both relative as well as absolute terms --- from 40 per cent and Rs 3598 crore in 1999-2000, to 30 per cent and Rs 2974 crore in 2000-2001. Although the internal resource generation figure is budgeted to increase to Rs 3,550 crore in the coming fiscal, it would still be financing only 32 per cent of the plan, which is much below the average of 58 per cent and 43 per cent for the eighth and seventh plan periods respectively. There is no scope for coming out of this morass.

Indian Railway have entered a death trap. The total lease charges payable to Indian Railways Finance Corporation (IRFC), financing rolling-stock and other projects under BOLT and Own Your Wagon scheme, is Rs 3291 crore. The dividend, which is nothing but interest payable to general exchequer, is Rs 2352 crore. The two add up to Rs 5,643 crore which is more than the market borrowing of Rs 3,000 crore through the IRFC. The lease charges payable to the IRFC alone work out to Rs 3,028 crore which is more than what is proposed to be charged from the market through the IRFC. Thus the railway are borrowing to pay the lease charges to the IRFC.

Much has been said about the West Bengal package in the budget. But no new project has been sanctioned in the budget, no additional allocation has been made for the projects which were announced last year. There has been little or no progress in most of the projects that were undertaken. This is rather a fraud which has been committed with the people of West Bengal.

This budget is populist politics rather than a serious exercise to meet the safety and development requirements of the railways. It is absolutely certain that additional burdens on the people will be imposed once the West Bengal assembly elections are over.