Prabhu plans to put Railways on track

Prabhu plans to put Railways on track

By C. RAJASHEKHAR | 27 February, 2016
He has focused on cutting costs by purchasing electricity from the open market through the open bidding route.
For most of Suresh Prabhu’s predecessors, the Rail Budget was an opportunity to play to the gallery with some spectacular announcements scoring a few political brownie points in the process. However, for Suresh Prabhakar Prabhu, the Rail Budget represents a template for a radical overhaul of Indian Railways.
Suresh Prabhu’s 2016-17 budget is, in some senses, an extension of his journey that he began with his first budget last year. 
What is particularly noteworthy is that within months of assuming office last year, Prabhu had grasped the most critical issues facing Indian Railways and began tackling them in right earnest.
What are the principal challenges faced by Indian Railways today? In brief, two. Plagued by, one, a severe lack of finances over time, the Ministry of Railways could not, two, invest in the development of rail infrastructure, as a result of which both passenger and freight lines got congested, which, in turn, further eroded the profitability of Indian Railways, leading to a vicious cycle kind of situation over the last two decades or so. 
In order to combat the first bottleneck of shortage of financial resources, Prabhu unveiled a path-breaking Rs 8.56 lakh crore investment plan spread over a five-year period in his first budget last year. Apart from the Gross Budgetary Support (GBS), Prabhu had put forward some innovative financing models such JVs with state governments, PPP investments to spur manufacturing and railway station redevelopment and market borrowings, so as to ensure adequate funds to execute rail infrastructure projects. For instance, Prabhu has persuaded the LIC to invest Rs 1.5 lakh crore over a period of five years on extremely favourable terms. Or recently, the Railways auctioned scrap for almost Rs 3000 crore through a transparent and scam free online auction process. In fact, the Rail Minister has targeted to increase scrap sale by more than 50% to garner revenue. Or say the JVs with states to mobilise resources to develop rail projects; an idea conceived and unfolded during Prabhu’s tenure as minister. The said JV companies, wherein Railways is a minority shareholder, are free to raise capital from the market to fund the works. The Railways have already signed MOUs with five states to create JVs, namely, Odisha, Kerala, Maharashtra, Andhra Pradesh and Chhattisgarh and another 12 states are reportedly game to the said JVs. Likewise, the Rail Minister is actively looking at monetisation of soft assets data and software through web service, FM radio in trains and monetisation of hard assets like railway land by planning to utilise land near tracks for horticulture and utilising railway land for building specialised warehouses. Or take the ambitious station redevelopment plan for over 100 stations, which will help monetise land and buildings through commercial exploitation of vacant land and space rights over station buildings. 
Apart from raising revenues, the minister has also focused on cutting costs. For instance, Railways is attempting to prune its energy bill by purchasing electricity from the open market through the open bidding route, saving money in the process. 
The Railways had for the first time invited bids to buy power for the North Central Railways in October 2015; Adani Power emerged as the successful bidder and Railways saved about Rs 150 crore annually over the more expensive power that it sourced earlier from NTPC. 
In order to combat the second challenge of under-investment in rail infrastructure, expenditure plans on building rail infrastructure were delineated last year itself. Prabhu had planned to spend about Rs 199,320 crore on network decongestion including Dedicated Freight Corridors, electrification, doubling and tripling of lines, Rs 193,000 crore on network expansion and about Rs 65,000 crore on high speed rail and elevated corridors over a period of five years. For FY 2016-17, Prabhu has pegged plan expenditure (plan spending is regarded as developmental spending by economists and economic administrators) at Rs 1.21 lakh crore, 21% higher than 2015-16, mostly on augmentation of rail infrastructure. He has also commissioned 2,800 km of broad gauge track in 2016-17; 2015-16 is expected to surpass the commissioning of the targeted 2,500 km of broad gauge lines. It may be noted that in 2016-17, broad gauge lines are to be laid down at the rate of over 7 km per day against an average of about 4.3 km per day in the last six years. In 2016-17, 2,000 km of lines are to be commissioned for electrification; up from 1,600 km in 2015-16. 
Three new Dedicated Freight Corridors (DFCs) connecting Delhi to Chennai, Kharagpur to Mumbai and Kharagpur to Vijaywada are proposed and rail connectivity to ports of Jaigarh, Dighi, Rewas and Paradip are under implementation, while Tuna port has been commissioned in 2015-16. For 2016-17, the minister proposes to take up rail projects to connect the ports of Nargol and Hazira under PPP.

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Railways are already in dire financial straits. The huge staff a/c salaries, allowances, huge arrears payments, huge pension payments etc for 14 lakh Rly employees & 12 lakh Rly pensioners already consume about 60% of their total expenses. Huge financial burdens on a/c of 7PC for Railways may make it about 75%. However the Railway Minister has also unfortunately shied away from taking a few major bold decisions. Some examples: (1). Postponing by two years addl.heavy financial burden of about Rs.28000 crores on a/c of 7PC based enhanced salaries, allowances, pensions payments etc.for 14 lakh serving Rly employees and 12 lakh Rly pensioners. Rather he seems to be very enthu on its early payments. Why? They already get decent substantial monthly salaries/allowances/pensions etc as per 6th PC wage awards which they managed to get through blackmailing Rly strike threats. The various staff benefit a/c expenses alone consume about 60% of Railways total expenses. now.already. (2). Generating approx.Rs.10,000 crores addl.revenues for Railways by curtailing extra-generous LTC benefits (Rly Passes) to just one LTC each per year for 14lakh Rly employees, as against 6 to 9 LTCs each annually going on for years. . This will release several million addl.sleeper berths in various classes.for paying public and so will generate huge addl.Rly revenues. Likewise PTOs facility for them also need to be reduced to one annually as against 6 PTOs at present. Millions of employees of other PSUs, govt.depts/institutions etc.COMPELLED to accept ONLY ONE LTC ONCE IN TWO YEARS only.(3) Rly pensioners get apart from generous mothly pensions, 2 to 3 Rly LTCs (Passes) each per year. Curtail it to just one Rly Pass each per year for them.. Millions of retired govt/PSU employees don’t get any such post-retirement LTC facility at all. In no other private/public sector company such lavish LTCfacilities/benefits are showered on the employees as in Railways. (4). Rly employees also need to be asked to pay henceforth various sleeper berths reservation charges, superfast charges, sleeper charges, cancellation charges etc. Max. 4 berths only per Rly Pass should be allowed during reservations done for 14 lakh Rly PRS Offices. (5). .Some past unethical, irrational, unfair, unusual baggages in Railways do need to be unloaded at the very earliest, preferably from 1st April this year.

1. Increase passenger fares across the board by 10% per annum for next two years. 2. Corruption eats up at least 10% of the expenditure on capes and open. Put an end to this massive leakage. 3. Postpone 7PC payout and link it to productivity gains 4. Improve working conditions for train drivers - esp toilet facilities on long distance trains

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