The Rail Budget for 2011-12 to be presented on Friday by the Union Railway Minister Ms Mamata Banerjee to Parliament cannot be a facile exercise for this firebrand leader of the Trinamool Congress as she has to strike a plausible balance between populism and pragmatism, given the rickety finances of the system and the Assembly election in West Bengal where her stakes are substantial.
Leaving aside politics or the need to wrest power from the protracted Left rule in West Bengal to establish her party's sway there, Ms Banerjee must perforce take a decisive call by being hard-nosed this time for the prolonged abstinence on purely populist grounds not to touch the passenger fares in the past, an unenviable legacy from the days of Mr Lalu Prasad, the RJD supremo.
As the 11{+t}{+h} Plan (2007-12) traverses the course of UPA I and UPA II, it is a dismal testimony from the Railway's current Financial Commissioner Mr Sudheer Pal Singh that out of the overall internal generation of resources target of Rs 90,000 crore for the quinquennium, the Railways would fall short by a staggering Rs 30,000 crore. This shows how the social cost of cross-subsidising passenger fares by freight and running uneconomic routes and fancy projects over the years on political considerations by successive rail ministers had resulted in inept financial management.
As it is, the ordinary working expenses (operational expenditure) had gone up from Rs 37,432.53 crore in 2006-07 to Rs 66,152.38 crore in 2009-10 due to the higher price of fuel (diesel), spurt in lease charges, higher cost of stores and the implementation of the Sixth Pay Commission's recommendations. The situation in the current fiscal has only worsened as the operating ratio has risen to unsustainable levels.
The Railways may gloat over the fact that with 1.4 million employees and 1.2 million pensioners, it had to bear on its own the brunt of the Sixth Pay Commission recommendations assessed at Rs 55,000 crore, inclusive of pensions for the first three years up to March 2011.
With runaway expenditure and slowdown in earnings due to the general slowdown of the economy after 2007-08 in the wake of the global financial crisis, the financial position of the Railways today is in a parlous state.
Even as the Railways seek double the budgetary support for the next fiscal against the Rs 15,800 crore extended to them this fiscal, the Finance Ministry and the Planning Commission may not agree to this huge surge in support at a time when the authorities had signalled the intention to stay away from stimulus measures so as to be on course with the fiscal deficit reduction target.
Although a flurry of initiatives to attract private investment to the Railways had been in vogue, such as the wagon leasing scheme, liberalised wagon investment scheme, special freight train operator scheme, private freight terminal scheme, development of automobile and ancillary hub and automobile freight train operator scheme, the results so far have not been encouraging enough as the private industry has its own risks assessment to invest or stay invested in long-gestation projects with no carrots to comfort them.
Interestingly, the Railways' announcement to develop 50 railway stations as world-class model stations with private players a couple of years ago is yet to take off to catch the eye of the travelling public in terms of an aesthetic ambience with sophisticated facilities for users.
Considering the fact that the Vision 2020 document of the Ministry envisaged mobilisation of Rs 14 lakh crore in the years ahead for capacity augmentation and modernisation of this arterial mode of transport which has given ground to the road transport system in recent years, it is time the Railways dusted off the various valid proposals outlined by a raft of committees including the Rakesh Mohan Committee set up in the early years of the last decade to generate resources to realise the vision.
Hopefully, Ms Banerjee would plump for a pragmatic policy to rope in private-public partnerships to kick off several worthwhile programmes and also align cost to benefit for both passengers and user-industries, instead of standing a supplicant before the General Exchequer or the Plan panel and pleading for resources. The answer to this would be known on February 25 when she unveils the Rail Budget for the next fiscal, the last year of the 11th Plan.