RAIL BUDGET, 2008 Lalu on Familiar Track

Lalu Prasad, the Union Railway Minister, was on the job again. His performance was in line with what was expected of him.

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Lalu Prasad, the Union Railway Minister, was on the job again. His performance was in line with what was expected of him. He was with the same rustic look, characteristic humour and uncharacteristic lack of humility (in almost all the verses he has quoted he has showered praises on himself, singularly). Last year, when he was presenting the budget, opposition members kept shouting in the well of the house but the unperturbed man did not care. This year the opposition benches become wiser and let him act and enact the way he liked. That was his day, his hour and his moment, the monarch of all he surveyed.
The railway budget has both good and bad news. First, let us take a look of the good tidings.
The cash surplus of the Railways rose steadily from Rs 9000 cr in 2005 to Rs 14000 cr in 2006 to Rs 20000 cr in 2007. In 2007-08, railways are estimated to have earned a cash surplus before dividend of Rs. 25000 cr. In the last four years, Lalu reported a cumulative cash surplus before dividend of Rs.68,778 cr. Out of this Rs. 15,898 cr has been paid as dividend, and Rs. 39,215 cr has been ploughed back.  All these achieved without any increase in fares and freight charges. Much more has been promised for the year 2008-09, that again without any proposal of increase in fares or freight. On the contrary the minister has announced reduction, be it token, in fares. It is a history sort of thing that the railways are earning cash surplus without any upward revision of prices for five consecutive years.
The minister has spelled out the methods adopted to achieve the profitability of a government department that was earlier running into losses. We may quote him verbatim, “There is no great mystery behind the strategy of this turnaround. It is common knowledge that the marginal cost in a capital-intensive business like Railways is substantially less than the average cost of operations. It is for this reason that we followed a strategy of playing on volumes, driving down unit cost, reducing tariffs and increasing market share to achieve record profits. The focus is on increasing yield per train rather than increasing tariff per passenger or per ton…. Instead of making across the board increases in tariff we undertook rationalisation of the freight tariff. While on the one hand we reduced freight tariff for petrol and diesel, on the other we increased the tariff for iron ore for exports. …. Instead of increasing passenger fares, we concentrated on increasing the length of passenger trains.”
A noteworthy point in the above statement is that the minister has called his department capital intensive. The person heading a work force of 14 lakh employees calls his organisation capital intensive. And here lies the psyche that is opening up the risks!
Lalu Prasad has announced a number of social, including staff, welfare methods. These measures include appointment of licensed porters to the post of gangmen and other Group D posts, 50 per cent concession for lady senior citizens, Concession to Ashok Chakra awardees, Concession for AIDS affected persons, Mother-Child Health Express, Special Campaign to clear the backlog vacancies of Schedule Castes and Schedule Tribes, Appointments of Other Backward Castes candidates, Minorities Welfare Cell increasing bonus for staff for 2006-07 from 65 to 70 days, increasing contribution to the Staff Benefit Fund by ten times from Rs. 35 to Rs. 350 per employee for the year 2008-09, and the benefit of post retirement complementary passes and weightage in computation of pensionary benefits for employees who joined railways from other public sector enterprises. Many, if not majority, of these announcements fall under the category of populous political stances designed to impress the public at large. But then at least it shows that the railways intend to percolate, rather pass on, the benefits of profitability to its employees and the public.
The bad news is that Lalu Prasad, the socialist leader, is keen to privatise this huge prized possession of the Indian government. He is moving at a very high speed in this dangerous track. The stake for the nation is high and it is simply wished that somehow somebody should use the break. One may have theoretical debate whether railways are capital intensive or labour intensive but one thing is clear that this love for outsourcing of capital and intention of involving private capital as considerable partners is not good for the future of the nation. In the name of Public-Private-Partnership (PPP) with the justification of making heavy investments for the expansion of the network, modernisation and upgradation of the technology and for providing world class facilities to the customers in the coming years scheme to attract investment of Rs. 100,000 cr over next 5 years   from private sources have been prepared.
“These will include projects for provision of world class facilities at metro stations, setting up state of the art rolling stock production units and construction of multi-modal logistics parks… through global competitive bidding, concessions would be awarded for developing the New Delhi, Chhatrapati Shivaji Terminus, Mumbai, Patna and Secunderabad railway stations into world class station during 2008-09….PPP partners would be selected for setting up diesel loco, electric loco and rail coach factory at an estimated cost of Rs. 4,000 cr. It is also expected that container trains, container depot and multi-modal logistics.”
Someone should tutor Lalu Prasad that this pace of privatisation is fraught with dangers. The minister should be made to read passages from the writings of Ram Manohar Lohia or JP, whoever he remembers, on the subject. Someone else seems to tutoring him.