Poised for the big push, Prabhu walks tightrope

Sandeep Dikshit

New Delhi, February 26

Suresh Prabhu has set a healthy precedent by perhaps being the first Railway Minister not listing barely known places where new tracks will be laid.

He also kept away from other staple of Railway Budgets – more stoppages for existing trains, new ones on already-choked routes and increasing the frequency of others. But his Budget speech and the accompanying white paper give sufficient indications that Prabhu is coiled for the big push to disentangle the railways from the never-ending cycle of slight incremental progress.

Understanding the issues

Prabhu stands out in getting to the nub of the problem. The first is about the way railway accounts are formatted and the main reason why big ticket investors have not lent money to the railways.

As the Minister indicated, he plans to modify the present system of cash-flow accounting to reflect assets and liabilities. This is a necessary prerequisite for major global investors before they invest in an institution.

Required: A neutral referee

The second major requirement for investors is a system to sort out commercial disputes. The telecom and insurance sectors began attracting big money only after they set up regulators. Prabhu has addressed this aspect by proposing a mechanism that frames rules, sets performance standards, fixes tariffs and adjudicates on disputes between companies and the Ministry. This charter is the same as that of the Telecom Regulatory Authority of India (TRAI) and the Insurance Regulatory Development Authority (IRDA).

These steps should ensure global investors eyeing opportunities in emerging countries help implement Modi’s vision for the railways. As Prabhu honestly admitted, many of the existing schemes are in the process of being tweaked. Therefore, funds from these sources are at least a year away.

Emulating Nitish Kumar’s vision

Yet the Minister intends implementing some systematic improvements this year itself with some help from the Finance Ministry. The idea is not new. Nitish Kumar followed a similar course and the benefits were reaped by Lalu Prasad. Prabhu has sought an additional Rs 20,000 crore on the same premise – to implement a safety review committee’s recommendations. “IR has requested the Ministry of Finance for a grant for second phase of Special Railway Safety Fund to undertake works recommended by the Kakodkar Committee,” says the white paper.

Many of the projects to be completed with this money such as modernising signaling, track renewal and repairing British era bridges will eliminate speed restrictions and thus help the railways push through more trains. The railways will also expand the width of its profitable routes by adding more lines. The Minister has repeatedly stated that this will be his focus than laying down branch lines to nowhere.

Banking on derived demand

Railway profitability hinges on a growing economy and more equitable income distribution. In the short term, Prabhu has tried to attract the industry and passengers by promising a drastic improvement in the delivery of services with more e-based applications. For the industry, he has offered better efficiency by an operating ratio of 88.5 per cent.

Prabhu must also be aware that most of the proposed reforms cannot be implemented without reorganising the Railway Board and several railways disciplines that battle each other. In an HR-intensive system, this cannot even be attempted without consent of the unions or taking them head on. So far, the Modi government has done neither.

Ultimately, Prabhu is walking a tightrope. If the unions don’t agree or economic growth fails to pick up, he will have to fall back on implementing schemes outlined by his predecessors.

Employment opportunities

• Upgrading manufacturing facilities for Make in India initiative
• Training auto/taxi operators as tour guides 
• Mobilising personnel for skill development 
• Promoting products made by self help groups and women

Environment

• Detailed energy audit for identifying potential for energy saving
• Promotion of alternative source of energy by developing 1,000 MW solar plants through PPP initiatives
• Plan to set up “waste to energy” conversion plants

Elderly/senior citizens

• Increased quota for lower berths
• TTEs to be instructed to help senior citizens
• Middle bay of coaches to be reserved for the elderly 
• Lifts and escalators at major stations

We want to make Swachch Rail the driving force behind this government’s flagship programme – Swachch Bharat Abhiyan. Hence, we now work on Swachch Rail Swachch Bharat. — Suresh Prabhu, Railway Minister