The Railway Budget

The 2005 Railway Budget, presented by the inimitable Laloo Prasad Yadav, is yet another journey into darkness for what was one the pride of India – Indian Railways (IR). Year after year the ministers in-charge of this portfolio have been driving it deeper and deeper into debt and non-profit. This is, of course, done with an eye on the elections. Before we delve deeper into the repercussions of the budget, let us define the kind of travelers on our trains.

The IR carries two primary categories of travelers – business and pleasure. The business traveler is on his way to a profit and the company usually pays for his journey. The pleasure traveler is on a holiday, usually to visit relatives or just on a fun trip. Neither of these categories of people needs to have their journeys subsidized, which is the excuse put forth every time rail fares are not hiked. The daily “travel to work” crowd is on the suburban railways, and that can be subsidized.

Year after year, railway budgets have kept passenger fares to a minimum and passed on the burden to freight fares. This has resulted in freight fares becoming exorbitant and therefore uneconomical. This situation has led to producers depending on roadways or passing on the cost of transportation to the end-user. Either way, the common man pays.

The dependency on roadways has meant that India’s dependency on fossil fuels has gone up. In a country that subsidizes petrol and diesel, this has meant an added burden on the common man. Another repercussion has been the increase in pollutants in the air. Railways on the other hand run on electricity and are a non-polluting form of transport.

Recently a study showed that it was easier for the Highways Department to attract FDI that it was for the Railways. Skewed as it may sound, it stands to reason. Private investors know that any money they pump into the Railways is lost, while money spent on roads can be made back. Is it then surprising that the Railways budget finds a deficit of over 500 crores? The Union Budget just does not have the money that is required to keep the railways running and private investors will not sink money in a losing proposition.

The sharp increase in the number of train derailments and the deaths that accompany such events are a sorry display of the state of the railways. Mr. LPY may tout the “increased” revenue of the railways, but what he will not tell you is that the railways is not breaking even. It may be making more money, but that is not sufficient to offset the running costs, let alone allow for maintenance of tracks and equipment.
So while our railway ministers go on coming out with “populist budgets, they seldom tell us that it is the populace that pay – in money and with life.


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