(M.K. Venu is Executive Editor of Amar Ujala publications group)
Railway Minister Suresh Prabhu today articulated the Prime Minister's grand vision of modernising and transforming the Indian Railways by investing a whopping Rs.8.5 lakh crore over the next five years on the expansion of freight and passenger networks, as well as other infrastructure. Skeptics immediately raised the question of where such massive funds will come from. Indeed, there is nothing wrong in thinking big. But there needs to be a transformation in management culture to be able to act big.
To raise and spend $140 billion on the modernisation of the Railways over five years would mean organising funds of nearly $28 billion every year. Is the current railway management attuned to this scale of activity? Admittedly, we have talented railway engineers and managers. But even talented and experienced management personnel need special training to think and act on the scale outlined by Suresh Prabhu on behalf of the Prime Minister.
Modi also has a pet project of setting up a high-speed network of rail tracks connecting the major metros of Delhi, Chennai, Kolkata, Bangalore and Mumbai. Then there is the plan to launch a bullet train between Mumbai and Ahmedabad at the cost of Rs.60,000 crore. Some of these plans are still being studied by expert committees.
In recent years, over 90% of the revenues have gone towards working expenses and nothing has remained for modernisation. For 2015-16, Prabhu projects that 89% of revenues will go towards payment of salaries and other day-to-day expenses. Again, very little left for modernisation and massive expansion.
At present, the Railways earns some 29 paise per passenger per kilometre but its break-even cost is about 53 paise per kilometre. Despite this deficit, Prabhu chose not to raise passenger fares, even for higher classes (like AC travel). With this kind of economics, it may be unwise for the utility to raise Rs.8.5 lakh crore-- mostly debt-- for modernisation over the next five years. It could get into a debt trap. The Pay Commission recommendations in 2016 -which will mandate higher salaries - would add to the debt trap.
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