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A standstill Railway Budget

Y P Anand
Former Chairman, Railway Board

Nitish Kumar, in his Railway Budget of 1998, had taken a necessary step to balance the impact of the Fifth Pay Commission. He raised only passenger fares, leaving freight rates practically unchanged.

But a disastrous budget followed in 2000, in which the Railways were made insolvent for the first time since Independence. Last year's railway budget did nothing to mitigate it. The trend continued. This budget may, at best, be described as a standstill budget. However, it reveals the weaknesses of the Indian Railways.

A freight load of 489 million tonne during the last year of the Ninth Plan (2001-02), as against 410 million tonne during the last year of the Eighth Plan (1996-97), shows a growth of less than 4 per cent. This is as against the GDP growth of 5-6 per cent. This indicates a decline in the Railways' share in freight traffic;

A crisis has developed out of the decline in allocation to the Depreciation Reserve Fund, from a peak of 14 per cent of gross income down to about 7 per cent.

This has resulted in the need for a Safety Fund. For 2001-02 the budgeted provision (including that for Safety Fund) was 7.5 per cent, but the revised figure was 5.6 per cent. Reducing allocations to the Depreciation Reserve Fund and Capital Fund has been an easy way of balancing the accounts.

During 2001-02, the revised estimates indicate a shortfall of income twice the shortfall in expenditure. That shows the inelasticity of the Railways' expenditure.

There have been increases in freight and passenger fares. However, these do not improve the Railways' financial position and leave them as poor as they had been in the last three years.

Vital issues like investments, services and giving the railway management adequate autonomy remain unattended.

The government had formed an expert group whose paper "The IR 2001: Policy Imperative For Reinvention of Growth" missed the central point of the Indian Raiways.

Since the Fifth Pay Commission and the subsequent budgets, the Railways' financial health is no longer related to functional efficiency.

The Railways are a valuable commercial asset of the Indian people. Starving them of funds and forcing them to perform its welfare function are not in the nation al interest.

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