Arun Jaitley the Union Finance Minister has proposed a capital expenditure of Rs 1, 31,000 crore for Indian Railways in FY 2017-18. Now with this pace, the Railways are unlikely to achieve its five-year capex target of Rs 8.56 lakh crore but the speed at which new rail lines are being laid down needs to be appreciated. In the current financial year, it plans to commission no less than 3,500 kms as against 2,800 kms in 2016-17.
The other major announcement in this year’s budget was creation of a safety fund of Rs 1,00,000 crore over the next five years which should be a good move in the wake of recent train accidents but it is not clear as how much fund Ministry of Finance has agreed to contribute for it. As mentioned in the budget it has been said that central government will provide seed capital and the Railways will be arranging the balance resources from their own revenues and other sources.
But if Railways has to commit larger share to the fund it is unlikely to be a significant step. Since financial health of Railways is parlous, it will be very difficult for the public transporter to share this burden. There was wide expectation that there would be announcement in the budget for increasing freight traffic for Railways which didn’t come. The Railways has been consistently losing its freight and passenger traffic which only shows that something is wrong and therefore some measures should have been taken to address this malady.
There is nodal shift towards surface transport as Railways has been losing its competitive edge which requires some drastic measures to rectify. The Railways is as a matter of fact is in urgent need to increase its traffic. Of late It has been losing traffic in bulk items like coal, food grains, cement and petroleum products. The Budget said that Railways will provide end-to-end integrated transport solutions for select commodities tying with logistics players which is meant for commodities like perishable items like fruits and vegetables, containers and parcels which are only a small part of the Railways’ total traffic.
The budget could easily have proposed to raise passenger fare marginally in order to bring some incentives for freight and the government should have moreover ensured funds for wagons and rolling stocks. It seems the entire focus of the government is on restructuring the Railways which is definitely a move in the right direction but this should go along with the actions.
It is absolutely fine for the behemoth to shed some excess flab and get away from the non-core activities. Presently, there are certain areas where Railways is deploying its bulk of resources but this should not be happening as these are not the core function of the Railways. This also affects the profitability of the Railways which needs to be curbed.
DISCLAIMER : Views expressed above are the author’s own.