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Monday, February 28, 2011

Railway Budget 2011

I normally write about issues concerning higher education in India. But another of my passion is Indian Railways, and if I am allowed to brag a little, I am co-founder of Indian Railway Fan Club.

So, I await Railway Budget with eagerness to know what new and exciting things are going to happen next year. But alas, this year's budget was rather disappointing. Let me go through the major announcements of the budget and comment on them, so that you understand why I am disappointed.

RM mentioned a list of policy initiatives to encourage private investments into areas which are important from Railways point of view, but yet are not the core areas. It is claimed that Railways have 85 proposals already under these initiatives. But I am not impressed. Railways have a track record of changing the rules of the game after inviting private participation. That has been the primary reason as to why many such initiatives do not succeed. The operation of private container trains is a recent example.

Minister announced setting up of a Metro coach factory near Singur. But Indian Railways have a very minimal presence in the metro market,with only Kolkata Metro under its belt. Would such a factory have sufficient demand from Kolkata Metro. If not, then why go into a non-core area, and try to compete for the orders of other Metro organizations.

Minister also proposed to setup a Diesel Locomotive Center in Manipur. Never heard of a DLC. The speech writer perhaps meant a Diesel Loco Shed.

IR plans to open a center of excellence in software at Darjeeling under the aegis of CRIS. I wonder how many software engineers would like to work at Darjeeling, a place which is more than 2 hours away from the nearest airport, and more than 2 hours away from a mainline railway station. Also, is Darjeeling the right choice for such a center. If we can find more land in and around Darjeeling, we should use it to create more tourism infrastructure. Tourism is the core attraction of Darjeeling and we want to ignore that need and set up a software center there. Does not make much sense to me.

A large organization, that too a government organization like IR, should consider societal role in addition to its business, but for a few years now, IR has been made to only consider its societal role and business appears to be on the back-burner. Continuing with that line, there is yet another proposal this time - to give houses to those who live next to Railway lines. Building large number of lines only from social perspective was bad enough, but now we want to go much beyond that and provide not just subsidized transport, but also, subsidized housing.

The Minister admits that they need more money, but says that it will be raised through market borrowings and not by raising prices of tickets. We haven't seen any increase in ticket prices for 8 years now, and in this period, the energy price as well as salaries have more than doubled. It is no wonder that Railways have no money for development work. Too much market borrowings only mean that you want the prices to be raised by the next Minister, or demand subsidy from the general budget.

Does any one notice that Railway Ministers always talk about expected achievements of the current financial year. For example, this time, RM said that as opposed to a target of 1000 KM of new lines, "we may do over 700 KM." You would never expect them to say, as of February 1st, we have already made operational so many RTKMs, and here is the list." They can't be caught giving out verifiable information, since that could attract a privilege motion in the Parliament. If some newspaper reports are to be believed, IR may add no more than 200 RTKM to its network in the current financial year. The reason: No money for development work. Same is the situation with respect to developing world class stations, model stations, electrification targets, and so on. No money for development work.

A meaningless announcement was about the incentives to a state which ensures trouble free train running for the whole year. Such state(s) would get 2 extra trains and 2 projects. This can hardly be implemented. Firstly, no state may qualify. There would always be some hassles -small and big - in any activity in this country. Even if some state qualifies, how would you convince people of that state that the 2 trains marked under "incentive" were anyway not going to be started.

An incentive which is indistinguishable from the normal cannot really be an incentive.

There is no clarity on a lot of announcements in the budget. What would this national helpline on security do. Is it supposed to be to lodge complaints, or give information about incidents or suspicious objects/people, or to inform the authorities that GRP/RPF people were not there on the scene when they were required. Similarly, what is the Super-AC class. What additional features beyond AC-1 will be there in it. A couple of more lines on the description of Go India card would have been so much nicer.

The budget talked about SIMRAN, but the language is very confusing. Based on the success of pilot project of SIMRAN, they will implement a Real-time Train Information System. Does it mean that RTIS will be based on SIMRAN, or was SIMRAN only the pilot project to demonstrate feasibility of such a concept, and now they could use any competing technology.

What is funny is that Railways have had a system for the last 150 years through which they know exactly where a train is at any point in time (at which station, or between which two stations). For more than a decade, all this information has been on computers at various control rooms across the length and breadth of this country. The only thing they need to install RTIS is to let RTIS read data from the computers of these control rooms and put it up in some nice format through the train enquiry website. They don't need SIMRAN for RTIS. The day they will take the decision to share the position information with public, they can do it without SIMRAN. They already had run some experimental websites on some divisions in the past which showed the positions of trains in that division.

When CRIS launches its new portal for e-ticketing, the additional money they charge for e-ticketing will come to Rs. 10 and Rs 5 for AC and non-AC classes respectively. But shouldn't it be removed altogether. In fact, they should start giving a discount to people booking online, since the cost of booking online is much less than the cost to the Railways when someone goes to a PRS counter to book the same ticket.

IR wants to recruit 1.75 lakh persons at class C and Class D level. When the rest of the government is trying to reduce and remove class D staff, and get more and more low level services through outsourcing agreements, why should Railways be recruiting such a huge number of persons, at a very high cost. Again, the bill has to be paid by the next Minister.

When it comes to financial numbers, the operating ratio is proposed to be 91.1%, which is pretty bad. What was the necessity of keeping the ratio at this level, when a small increase in fares could have been easily afforded by the traveling public. Even this ratio of 91.1% is based on unrealistic assumptions. It says that the ordinary working expense will go up by 9.9% to take care of both an increased activity to the tune of 6.4% (both freight and passenger traffic) and inflation. The inflation has been consistently above 10%, and this increased activity will require more manpower, more energy, more inputs of all kinds. Again, it is clear that it has been left to the next Minister to clean the mess that this year's budget will create.

The budget speech mentions the need of having an integrated development of the suburban railway networks. Let IR take the first step by creating a separate zone for Mumbai suburban network, just like it has done for Kolkata Metro. Also, when it decided to have Kolkata Metro as the tiniest zone of IR, it could have included the Kolkata suburban into this zone.

A strange announcement is about reducing the age for being considered senior citizen for women. Now, they can get senior citizen discount at the age of 58, as opposed to 60 earlier. The men will be senior citizen only when they are 60 year old. Why this differentiation. And senior ladies will get 50% discount, while the senior gents get only 40% (an improvement of 30% earlier though). There is no logic to reduction of age. All health related parameters have improved in the country in the last decade. The expected lifetime has improved. People are working longer. The retirement age was increased by 5th pay commission from 58 to 60, and if it wasn't increased further to 62 by the 6th pay commission, it was only because it wanted a younger government, considering the young profile of Indian population. So, there was every reason to increase the age for consideration of senior citizen, but we see a reduction instead.

 While the Minister is expected to say everything in a very positive tone, the news about DFC is not very exciting. There is no concrete timeline. A statement such as "DFC will be ready by December 2016" means that questions of delay will be handled by the next Minister. If everything is on schedule, why not give that schedule.

A large number of new trains, extensions, increased frequency, have been proposed. It is not clear whether there are enough resources to do all of that. We are talking about all aspects - the rolling stock, the manpower, and the line capacity. But the next Minister will answer those questions.

There are, of course, many positives as well. The focus on security, if it actually translates to practice, will be very good. I am particularly excited about the announcement of closing many level crossings and building ROBs. Interacting with top research groups in the country in coming up with high tech solutions to existing problems is laudable. If the policy initiatives to attract private investments work, it will be good for IR. There is a major push on setting up a large number of production units, including a Railway Industrial Park. IR certainly needs more inputs than what it has. And many of these things are proposed in PPP model, which is good. Having a captive power plant is a good idea, though we have been hearing about it for more than a decade. It is good to know that the trials of Fog-Safe device have been successful, and all issues related to ACD seems to have been finally resolved.

I hope that they start using catenary to support hotel load of the train through loco soon. Apparently, they have started doing this on Kalka Shatabdi, and I hope that the noisy End-on generation units are gone from Railways network soon. The experiment to provide Internet access in Howrah Rajdhani is also excellent. I hope they provide the service at a reasonable cost, and soon.

I am happy to hear about the studies for improving the speeds in some of the corridors to 160-200 KMPH, but this is not being said for the first time, and if the Railways cannot have the political will to charge higher fares, then higher speeds with massive investments will not be financially feasible.

But overall a very disappointing budget.


Sri Ramachandran said...

Good analysis Dheeraj. I read through the budget too, just saw a patchwork of sops; no real capital for improvement/modernization. And I was apalled at the operating ratio of 91%. Despite that, plans for hiring lots of new workers.

On a related note, China is building rail networks into India's neighboring countries - this might mean India loses freight trade traffic into neighbors also.

Hari said...

Often, I get amazed and overwhelmed by the services of our railways. If you ignore the punctuality, cleanlinesses part, the cost per kilometre is as low as <50 paise and you can travel in a train peacefully sleeping on berth. You have so many facilities at every station. I wonder whether such service is there in any part of the world at all! I always travel in sleeper class and enjoy it (not when travelling in Northern India).

Hari said...

Some questions I had about booking are: why do they charge extra when we book online using irctc? We are not utilizing their counter service and saving their time. So, we should get some benefit, in fact.