A Long Haul Ahead for the Rail­ways

It should get bud­getary sup­port for its sub­si­dies

The Economic Times - - The Edit Page -

The Prime Min­is­ter’s Of­fice has re­port­edly di­rected the fi­nance min­istry to make good re­cur­ring losses of the Rail­ways in op­er­at­ing sev­eral non-prof­itable strate­gic lines in hilly, coastal and back­ward ar­eas. It points to a wel­come change of track in rail fi­nances, but a lot more trac­tion is war­ranted for the Rail­ways to gain­fully and sus­tain­ably meet its so­cial obli­ga­tions. The ex­penses on strate­gic lines is but a small frac­tion of the to­tal so­cial ser­vice obli­ga­tions of the Rail­ways, es­ti­mated to be over 34,000 crore an­nu­ally. They should get this money, just as state power util­i­ties are sup­posed to get from the Bud­get the sub­si­dies they give farm­ers.

Fol­low­ing the merger of the rail bud­get with the Union Bud­get, the prac­tice of re­im­burs­ing the Rail­ways for op­er­at­ing the non-vi­able strate­gic lines had been ques­tion­ably dis­con­tin­ued. How­ever, go­ing for­ward, the en­tire so­cial ser­vice obli­ga­tion of the Rail­ways surely need to be fi­nanced by three tiers of gov­ern­ment: the Cen­tre, the con­cerned state and pos­si­bly mu­nic­i­pal bod­ies. There is no rea­son why, say, in Mumbai, sub­sidy, if that is needed, on sub­ur­ban rail ser­vices can­not be en­tirely lo­cally fi­nanced. The way ahead for the Rail­ways is to fol­low com­mer­cial ac­count­ing prac­tices to duly keep tab on so­cial costs. In par­al­lel, we do need in­de­pen­dent tar­iff set­ting, and grad­u­ally need to put in place a plan for com­pet­i­tive rail ser­vices, along with com­mon track and sig­nalling sys­tems.

To fast-track the mod­erni­sa­tion of the Rail­ways, the costs of meet­ing at­ten­dant so­cial obli­ga­tions need to be speed­ily re­im­bursed. It would then make it pos­si­ble for the Rail­ways to bet­ter al­lo­cate re­sources for re­vamp and ex­press upgra­da­tion of fa­cil­i­ties, and, in the process, opt for mod­u­lar in­vest­ments. True, the Rail­ways must, in tan­dem, boost non-fare rev­enue and ra­tio­nalise over­heads and sundry costs. But with­out trans­par­ently ac­count­ing for and meet­ing so­cial costs, the Rail­ways would fall short in its eco­nomic role in trans­port and haulage. We must seek clear ob­jec­tives and not merely mud­dle along the beaten track of pop­ulism and give­aways.

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