We will have a Railway budget on March 14. Why should there be a separate Railway budget? Origins behind separation in 1924 go back to Acworth Committee of 1921. No one bothers to read reports of current committees. Why should one read an 81-year-old report?
This is what Acworth Committee felt, "We recommend that the finance department should cease to control the internal finances of the Railways; that the Railways should have a separate budget of their own, be responsible for earning and expending their own income and for providing such net revenues as is required to meet the interest on debt incurred on or to be incurred by the government for Railways purposes; and that the Railways Budget should be presented to the Legislative Assembly not by the finance minister of the council but by the member in charge of the Railways."
That is, a separate budget would help improve Railway finances, and not merely facilitate additional bureaucracy and ministry for employment creation. How about a committee report, submitted 11 years ago, the Rakesh Mohan Committee on Railway finances? "These tendencies became accentuated in the 1990s and the economics of IR are now extremely vulnerable. For first time in 17 years, last year, IR was not able to pay a dividend to the government on its past investment. It is in financial crisis. Its ability to invest adequately in providing efficient and cost-competitive services in the future is seriously in question."
Railway finances improved after Rakesh Mohan Committee's report was written. Not only did Railways meet dividend obligations, they generated positive cash flows and operating profits increased. The operating ratio (OR) is a measure of efficiency. It tells us how much IR spends to earn Rs 100. OR declined to around 75%, but that was before Sixth Pay Commission.
We have had an Expert Group (chaired by Sam Pitroda) Report on modernisation of IR. This was about modernisation - tracks and bridges, signalling, rolling stock, stations and terminals, dedicated freight corridors, high-speed train corridors and ICT - and less about finances. But it talked about an investment of Rs 8,39,000 crore during 12th Plan, of which, Rs 3,96,000 crore was for modernisation. Where is the money going to come from?
Whatever one might say about disinvestment of railway PSUs, commercial utilisation of land owned by Railways and commercial exploitation of schools and hospitals owned by IR, the key is internal generation, gross budgetary support and extra-budgetary resources (market borrowings, bonds and PPPs). There has been another report too (Anil Kakodkar) on safety. To improve safety, we need Rs 1,00,000 crore over the next five years.
Back to OR. If one dates history of IR to 1951, never in its history has the OR exceeded Rs 100. Firm OR figures are still for 2010-11, when it was 92.3%. But today, it is more than 100%. Cash reserves have been whittled down. There is a loss of Rs 18 crore every day. About 1.4 million employees and 1.2 million pensioners. Other than Sixth Pay Commission, there was a productivity bonus, which has nothing to do with productivity.
Almost 70% of available resources are spent on establishment costs (primarily salary and pensions) and another 20% on electricity and diesel. (And let's not forget there is a backlog in filling safety-related vacancies too.) There is no guarantee that market borrowings (through Indian Railway Finance Corporation) or loans from Centre, or gross budgetary support, is not swallowed up by that black hole, apart from Centre's own fiscal mess. Both Sam Pitroda and Anil Kakodkar ducked the issue, at least directly. Why touch a sensitive issue if the modernisation and safety focus allow you to bypass it?
However, there is no getting away from increasing fares, both freight and passenger, particularly the latter. While these two reports may have ducked, in the past, PMO, Planning Commission and a Consultative Committee Report on Railways have argued for rate increases. After a fashion, freight rates were increased by 6% in October 2011.
But passenger fares have not been touched since 2002-03 and across-the-board passenger fares should increase by something like 30%. From factual, we now move to the speculative. What's the problem? First, nothing can be done before state-election (primarily UP) results. Second, Railway minister's leader doesn't want an increase. Third, until after March 6, we don't know if Dinesh Trivedi will be around to present a Railway budget. Such is the state of serious decision-making.
The Member of Parliament Local Area Development Division is entrusted with the responsibility of implementation of Member of Parliament Local Area Development Scheme (MPLADS). Under the scheme, each MP has the choice to suggest to the District Collector for, works to the tune of Rs.2 Crores per annum to be taken up in his/her constituency.