Railway Budget - Whither Innovation?

Shri pawan kumar bansal Sat, 03 Sep 2016

Railway Budget - Whither Innovation?

The Modi government has a penchant for hyperbole, some degree of narcissism, and a wonderful faculty of coining acronyms as also for running down the performance of its predecessors. These are manifest in the Rail Budget speech also. While the speech presenting the Budget is a political exercise, the documents accompanying it give the factual position. The Outcome and Performance Budget of Railways for 2016-17 mentions “Substantial Improvement
in Efficiency Indicators from 2010-11 onwards” which have helped in the marked turnaround in the performance of the Railways.

Operating Ratio

A vital parameter for measuring the success of a commercial enterprise is its Operating Ratio i.e. the amount it spends to earn one hundred rupees. The balance is what is left with it for development purposes etc. Last year the Hon’ble Minister put Indian Railways’ Operating Ratio at 88.5% and claimed it to be the best in nine years. Now it is revised to
90%. What is further distressing is that for the year 2016-17, the estimate is 92%.

There is another interesting facet of it, akin to playing with statistics. Appropriation to Depreciation Reserve Fund (DRF) is an important component of Total Working Expenses. For 2013-14 DRF was Rs. 8100 crore and for 2014-15 it was Rs.7975 crore. Budget Estimates 2015-16 had put it at Rs. 8100 but the Revised Estimates have brought it down to Rs. 5500 crore while for 2016-17 the Budget Estimates have further scaled it down to a meager Rs. 3200 i.e. Rs. 4900 cr. less that of 2013-2014. A realistic appropriation to Depreciation Reserve fund would have further compromised the Operating Ratio.

It was during the UPA II Government’s tenure that the Indian Railways entered the One Billion Tonne Select Club of USA, Russia and China in the year 2012-13. Budget 2015-2016 fixed the freight- loading target at 1,186.25 million tonnes. Revised Estimates have scaled it down to 1,107 million tonnes, a shortfall of 79.25 million tonnes and only 12 million tonnes more than the actual freight loading in 2014-15. The target for 2016-17 fails even to equal the 2015- 16 estimates.

The Hon’ble Minister claims unparalled success in many areas including commissioning of New Lines, Gauge Conversion and Doubling. While he has spoken of the completion of on-going works (begun by the last government), he has not said anything about new works that may have been started by the NDA Government. Comparisons are odious and generally should be avoided.

But since there are quite a few in the Budget speech, let me give an example. The number of consequential train accidents increased from 117 in 2013-14 to 131 (besides 4 on Konkan Railway) in 2014-15. The freight position has been described above. Even the number of passengers in 2015-16 was less than that in 2014-15.

The Hon’ble Minister in his speech meticulously avoids any reference to the stupendous task the Indian Railways have measured up to in the past or the vision and contribution of the UPA II government in the recent past in planning and taking definite steps towards setting up two locomotive factories in Bihar and building two Dedicated Freight Corridors which would free the existing tracks for passenger trains and thus tremendously improve performance of both the passenger and freight traffics. Rather the first is claimed to be a ‘ Make in India’ initiative of the present government and about the DFC, the Minister says, “ Since I assumed office, contracts worth Rs. 24000 crore have been awarded against Rs. 13,000 crore worth of contracts in the last 6 years.” The earlier stages of project conceptualization, longdrawn surveys, route delineation, land acquisition (the most formidable part of the process), working out financial model, approaching Japan (JICA) and the world Bank for funding and floating and finalisation of the tenders were the important steps UPA under-took before the NDA took over.

The High Level Safety Review Committee (headed by Dr. Anil Kakodkar), set up by UPA govt. in September 2011, gave its valuable report in February 2012. There is a multitude of measures that need to be taken to continuously improve Safety by the Indian Railways. This is an ever ongoing exercise. For example Integrated Coach Factory (ICF) evolved a “crash worthy” coach design years back.

Work on Train Protection Warning System (TPWS) to prevent train accidents by human error like Signal Passing at Danger and over speeding was started earlier. Similarly, a cost-effective. Train Collision Avoidance System (TCAS) was devised and some field trials carried out. That’s from where the NDA took over. These are not innovations of the NDA government.

Old Schemes

We find old schemes being marketed with some changes or new names. The decision to create joint ventures with State government reflects UPA Government’s decision to partner with States through contribution of requisite land for a railway project in a State. This was done without “sharing the ownership of Railway”, some thing more beneficial to the Railways and that which would not give rise to any legal disputes. Similarly the statement of policy on Public Privote Partnership simply replaces the UPA’s revamped participative policy to mainstream distant ports, mines, industrial clusters etc. through tracks to be built by their operators who were then to be recompensed through freight apportionment, retaining the operation with the Indian Railways.

Unprecedented Claims

The Hon’ble Minister calls the year 2015-16 “an unprecedented year for customer oriented works but all the works enumerated are only continuation of build-up on the existing ones. These include cleanliness, Ticketing, facilities for physically disabled (divyang), WiFi, redevelopment of stations, base kitchens, other safety measures, mobile alerts
and electronic display systems etc.

Guide lines for provision of amenities at stations identified for development under Adarsh Station Scheme, were revised in Aug. 2013 to focus on passenger comfort. These include 32 facilities, duly keeping in mind the requirements of passengers, particularly the aged and divyang. It was in 2013 that action to enhance capacity of e-ticketing system to 7,200 tickets per minute and to support 1,20,000 simultaneous users ( with capability to easily scale up as per future demand) was announced. One only needs to pick up last full budget of UPA II for the year 2013-14 to see this and for most of the present announcements including regarding Production units, skill development etc. I don’t fault the government for this. This is how every government endearours to take forward the development works of previous governments. The only peculiar feature
of the speech this year is the government’s penchant for grandstanding overtaking an otherwise humble Minister.


Technology is on fast mode across the world and every day young brains are coming up with new ideas and services through mobile Apps. It is, therefore, a natural expectation that a government -run commercial organization keeps pace with such developments. New Delhi-Kolkata Rajdhani was provided Wi-Fi service in 2013. It is some what amusing
to see critics even of introduction of colour TV now claim unusual credit for technology-driven enhancement of services and facilities. In today’s fast moving world this is sine qua non for keeping pace with changing times.

New Trains

Announcement to introduce Antodya Express, add Deen Dyalu Coaches for unreserved passengers and Humsafar, Tejas and the double-decker UDAY trains are again routine matters. It will be pertinent to recall that the Shatabdi trains were introduced during the Congress regime and the double decker was introduced by UPA in 2013. The Mahamana Express launched recently is again the result of UPA decision to introduce comfortable coaches with aesthetic interiors and made of fire retardant material. I had the opportunity to see one such 2nd class coach in 2013. These are now termed SMART (Specifically Modified Aesthetic Refreshing Travel) coaches.

High Speed Rail

The proposed High Speed Rail (HSR) project is often marketed as a brain wave of Prime Minister, Narindra Modi. The reality is that this high cost proposal has been on board for some time. The then Prime Minister, Dr. Manmohan Singh held discussions with the Japanese Prime Minister and President of France regarding the Mumbai-Ahmedabad
HSR corridor. As a result, a joint feasibility study for this corridor, financed jointly by Japan International Cooperation Agency (JICA) and Indian Railways was started in December, 2013. The Business Development Study was undertaken by the French Railways, SNCF and was underway at the time of change of government.

On-going Works

A cursory glance at the Outcome and Performance Budget of Railways for 2016-2017 gives us the description of ongoing works, including Road Over Bridges (ROBs) and Road Under Bridges (RUB,) and Adarsh Stations etc. Number of ROBs & RUBs completed in 2013-14 was 1115 while it was 1108 in 2014-15 but the number of those completed upto November, 2015 and projected to be completed upto March, 2016 will be 841. Rail side logistic parks and ware houses to promote freight loading and the rail auto hub in Chennai for automobile traffic also formed part of the UPA plan.

Investment and Annual Plan

The announcement about investing Rs. 8.5 lakh crore over a period of five years is welcome but we will have to wait for the actual position given the fact that the Annual Plan size of Rs. One lakh and ten thousand crore for the year 2015-16 has been revised downwards to Rs. 82,192.11 crore. The Hon’ble Minister has attributed a saving of Rs. 8,720 crore from the Budget Estimates 2015-16 to innovative means and extensive cost optimization. What has not been reported is that reduction in prices of HSD (diesel) during the last two years has been a windfall for the government.

Incidentally, this takes us to the concept of a dynamic Fuel Adjustment Component (FAC) approved by the Parliament in 2013 but abandoned by the government without reporting to the Parliament. It was then decided to increase or reduce the fares and freight rates depending upon the change in fuel cost on April, 1 and October, 1 every year. Accordingly
the benefit on this account should have been passed on to the passengers in October, 2014, April and October, 2015 and now w.e.f. April 1, 2016.

Additional Burden

One stroke by which the public has been hit hard is the enhancement of cancellation charges by 100% but it finds no mention in the budget speech in order to maintain the hyperbole adverted to earlier. Railway Passengers (Cancellation of tickets and refund of fare) Rules were amended with effect from 12.11.2015. Beside the abnormal
hike in cancellation charges and those for refund of fare on unused confirmed tickets, the time allowed for claiming refund (minus clerkage charges) on unused RAC/Wait listed/Partially confirmed tickets has been changed from ‘two to three hours after the actual departure of the train’ to ‘half an hour before the scheduled departure of the train’. The latter even lacks logic, holding passengers with unused RAC/Waitlisted ticket guilty of “No show” half an hour before the scheduled departure of the train.

The Outcome and Performance Budget accompanying the speech seems to have escaped the Minister’s notice as at many places the heading ‘Outcome’ just gives the object or benefit intended to flow from a particular action. The budget speech runs into 46 printed pages but in a sense it can be termed as ‘no budget.’ The most essential part of any budget is the Financial Performance of the last year and the Budget Estimates for the next year. These two important features do not form part of the Hon’ble Minister’s actual speech but have been appended as an annexure to it. This is the innovation!