PRAGOTI

The fare hike and the cacophony surrounding it in the mainstream media is nothing but political skullduggery, meant to draw attention away from the larger issues concerning the Indian Railways. It is important to bring the focus back on the core issue at stake: resisting privatization and preserving the Indian Railways as a viable and modern public sector organization. Whether the railway minister is “rolled back” along with the passenger fare hikes, is a matter of much lesser importance. 

1. The Operating Ratio of the Railways signifies the level of efficiency of the organization. It is the ratio of operating expenses of railways to its revenue earnings, or in other words, how much rupees is spent by the railways in a year to earn 100 rupees. The lower the ratio, the more efficient is the operation and the better it is for the financial health of the railways.

2. The White Paper on Indian Railways published by the Railway Ministry in December 2009 under the previous Railway Minister (Mamata Banerjee) had given the trend of the railways’ operating ratio during the tenure of the UPA-I government, i.e. from 2004 to 2009. A comparison of the financial performance of the railways under UPA-I and UPA-II government is provided in the table below. The operating ratio data between 2009 and 2012 are from the railway budget documents: 

3. The operating ratio fell steadily under the UPA-I government from 91% in 2004-05 to 75.9% in 2007-08. But it has increased steadily under the UPA-II government and stands at 95% in the current financial year (2011-12). The railway budget 2011 had estimated the operating ratio to be 91.1% in 2011-12 but it is ending the financial year with 95%. With such massive overshooting of budgetary targets, the claims made in the railway budget of improving the Operating Ratio to less than 85% in 2012-13 and to less than 75% by the end of 12th five year plan (2017) cannot be taken seriously. 

4. The fare hike that has taken place needs to be seen in the backdrop of this severe deterioration in the financial performance of the Indian Railways. But what explains this deterioration? This is the main issue confronting us. 

5. While presenting the railway budget last year (2011) the former railway minister Mamata Banerjee had said: "The testing times for the railways continue in 2010-11 due to the impact of allowances and several post-budgetary factors. On the earnings side, disruption of train   movements has resulted in a loss of about Rs. 1,500 crore and another Rs. 2,000 crore due to the ban on export of iron ore. As a result, the loading target had to be reduced by 20 million tonnes to 924 million tonnes…On the basis of freight traffic projection of 993 million tonnes and passenger growth of 6.4% over 2010-11, the Gross Traffic Receipts are estimated at Rs. 106239 crore (for 2011-12)…"

Dinesh Trivedi said in this year's budget speech (2012): "On the loading side, the continued ban on export of iron ore by Karnataka and Odisha state governments led to scaling down of loading target from 993 MT to 970 MT in the revised estimates. However, the earnings target for goods has been retained in view of freight rationalization implemented from 6th March, 2012…In view of the lower growth in number of passengers i.e. 5.1% to end of January 2012, as against the budgeted target of 5.9%, the earnings target has been scaled down by 1,656 crore to 28,800 crore in the revised estimates. Taking into account the lower growth in Other Coaching and Sundry earnings, the Gross Traffic Receipts have been kept at 103917 crore in the RE, short of the budget target by 2322 crore." 

6. What does this show? The targets for the basic operations of the railways, i.e. carrying passengers and goods traffic, are not being met. Last year (2010-11) the freight loading target had to be scaled down by 20 million tonnes. This year (2011-12) the shortfall in the freight loading target is by 23 million tonnes. The present railway minister is blaming the ban on iron ore exports for the shortfall. But the ban was in place last year too. Wasn’t the ban on iron ore exports taken into account while setting the target in 2011? 

7. Why are the freight loading targets being missed despite the economy growing at a reasonable pace? While real GDP grew at around 7% in 2011-12, the growth in freight loading is only 5%. The earnings on freight have only grown by 9% in 2011-12, despite nominal GDP growing at over 14%. This reflects the gross inefficiency of the railways. Clearly, the railway is losing freight traffic to other forms of transport, especially roadways.  

8. The railway minister is trying to meet the earnings target in freight traffic by increasing freight charges for most commodities like coal, fertilizers, foodgrains, steel, cement etc. which was notified on 6th March 2012. The 20% hike (on average) in freight charges will have an inflationary impact and the ordinary people have to bear the burden of the inefficiency of railway operations. 

9. Why is passenger traffic in railways not growing as per the projections? Mamata Banerjee had projected passenger traffic growth at 6.4% in 2011-12. Dinesh Trivedi brought it down to 5.9%. What has been achieved at the end of the financial year is only 5.1% growth. This is because of the deteriorating quality of services being provided on the one hand and the lack of concern for safety in the railways. 

10. The railways set targets for reducing accidents in terms of “accidents per million train kms” and on that basis it is claimed in this year’s rail budget: "The commitment made in 2001 to reduce accidents per million train km from 0.55 to 0.17 has been achieved." 

This claim is thoroughly misleading and underplays the large number of railway accidents and casualties which we continue to witness. The number of accidents and casualties as per the Indian Railways Annual Report 2010-11 is given in the table below: 

11. Already 55 “consequential train accidents” have occurred this year (2011-12) between April to November 2011, leading to the loss of lives of 104 persons. If the number of accidents in unmanned levels crossings is added, the total will be much higher. This dismal safety record of the railways is another important reason for the deterioration of railways performance.  

12. Dinesh Trivedi stated in his budget speech: "I am happy to inform that during the year 2011-12 we have recruited over 80,000 persons to fill up some of such vacancies. During 2012-13, more than one lakh persons are proposed to be recruited."

This claim cannot be verified in the absence of current employment figures in the budget documents. The railway budget documents show a gradual reduction in the total staff strength of the railways from 13.66 lakh in March 2010 to 13.62 lakh in March 2011. It is unclear whether the 80000 persons mentioned by the railway minister were all recruited against pending vacancies. 

13. In his reply to question number 2751 dated 16th December 2012 in the Rajya Sabha, the junior railway minister Bharatsingh Solanki stated that the number of vacancies in Group C and erstwhile Group D posts in the railways as on 1st April 2011 was 221499. He further stated that 14872 posts of Loco Pilots (including assistant loco pilots) and 55359 posts of Gangmen/Gangmate were lying vacant as on 1st April 2011. In order to be transparent the railway minister should have provided the break-up of the new recruitments in terms of the vacancies in Group C as well as Loco Pilots and Gangmen. 

14. The credibility of the railway budget making exercise has suffered under UPA-II because of the plethora of promises made in a budget one year, only to be forgotten next year. There are several examples since the 2010 budget: “50 world class stations”, “6 bottling plants for fresh water”, “5 sports academies”, “522 hospitals and diagnostic centres”, “40 multi-speciality hospitals”, “50 Kendriya Vidyalayas”, 7 new coach and loco factories, 5 new wagon factories, rail axle factories and so on. The silence or obfuscation of the present railway minister on these promises confirm that these budget announcements made by the former railway minister Mamata Banerjee in 2010 and 2011 were all gimmicks and a fraud on the Indian people. 

15. These false promises are now being utilized to initiate large scale privatization of the Indian Railways. The “Expert Group for Modernization of Railways” headed by Sam Pitroda has submitted its report in February 2012. The report recommends the development of “PPP models” in various areas of railways to attract private investment: stations and terminals, high speed rail corridors, freight terminals, leasing of wagons, loco and coach manufacturing units, captive power generation, railway hospitals and schools etc. The report also recommends mobilizing Rs. 50000 crore through “monetization” (read selling off) of land and airspace belonging to the railways. In keeping with these recommendations, this year’s railway budget has announced the setting up of companies like the “Indian Railway Station Development Corporation”, “Logistics Corporation” etc. in the PPP mode. 

16. The expert group envisages PPP investment in railways worth Rs. 4.13 lakh crore over the next 10 years:

17. Wherefrom this huge level of private investment will come is unclear from the expert group report. In fact it is unlikely to materialize, given the track record of private investments in the railways so far. What will rather happen is that such fantastic projections of private investments will be used to privatize railway assets wholesale, opening the way for corporate loot and scams. This follows a set pattern of privatizing PSUs, which is being seen in the case of Air India too: first make it unviable through deliberate mismanagement and erosion of credibility; then propagate how the public sector is inefficient and sell it off to private players. This big ticket privatization plan for the railways under the garb of “modernization” needs to be opposed firmly. 

18. The political drama over the passenger fare hike has drawn attention away from the dangerous direction for the Indian Railways underlying this year’s railway budget. It is not only the case that passenger fares for second class and sleeper class travel in mail/express trains have been hiked by Rs.3 and Rs.5 per 100 kms, respectively. This will of course adversely impact millions of rural migrant workers, employees and small entrepreneurs who have to frequently travel thousands of kilometers away from their hometowns. But the proposals contained in the railway budget go much beyond a one time hike in passenger fares.

19. The anti-people nature of the railway budget is fully exposed by the announcement of adding a “fuel adjustment component” to passenger fares, which implies periodic increase in passenger fares in tandem with the hike in fuel prices. The Union Budget 2012 has already made it clear through a Rs. 25000 crore cut in fuel subsidies that diesel prices are going to be hiked steeply in the near future. The railway fares would follow suit. 

20. Moreover, an “independent” Railway Tariff Regulatory Authority has been proposed in the railway budget. This is a clear indication of the direction in which the government wants to move. Railways across many countries were privatized in the early 1990s; the British Rail was privatized under the conservative government headed by John Major; the largest railway network in Latin America, the Ferrocarriles Argentinos (FA), was privatized by the neoliberal Carlos Menem government in Argentina. The adverse impact of these railway privatizations can be seen in the steep hikes in commuter fares making rail travel very costly in these countries and the enrichment of private companies at the cost of the state exchequer. 

21. Interestingly, the current government in neighbouring Pakistan is also utilizing the financial crisis faced by the Pakistan Railways to push for its privatization. This is being opposed by the railway employees in Pakistan and other progressive sections. It is this disastrous track into which the Indian Railways is also being led. 

22. The fare hike and the cacophony surrounding it in the mainstream media is nothing but political skullduggery, meant to draw attention away from the larger issues concerning the Indian Railways. It is important to bring the focus back on the core issue at stake: resisting privatization and preserving the Indian Railways as a viable and modern public sector organization. For this, the policy direction proposed in the railway budget 2012 needs to be opposed and reversed. Whether the railway minister is “rolled back” along with the passenger fare hikes, is a matter of much lesser importance. (end)