Complete write-up
A more
‘in-between-the-lines’ rail budget only supports the notion that the Congress
party is preparing for an early Lok Sabha election. Except politics of claims
and counterclaims, there was nothing new in the maiden Railway Budget speech of
Pawan Kumar Bansal.
After
the recent hike in the passenger fares in January, no one was expecting yet
another hike in the Lok Sabha election year.
But the
government coffers, more than the ill-health of the Indian Railways, was on the
radar of the makers of the Railway Budget 2013-14.
The UPA
government needs billions in funds to fund its populist schemes to encash them
in the upcoming general elections, which by the analysis of the political
developments of the moment, are going to be held later this year.
(WHY,
MORE THAN ANY OTHER PARTY, THE CONGRESS PARTY WOULD GO FOR A 2013 LOK SABHA
ELECTION?)
Indian
Railways’ ill-financial health has been a matter of concern for sometime now
and the sudden fare-hike in January was a well thought measure to address, at
least, some elements of the financial decline.
The
timing served two purposes in one go – financial and political. It gave the
Indian Railways the much needed cushion of increased cash flows. It also saved
the government from the protests of the political opposition if the hike was
announced at the floor of the Parliament during the presentation of the Budget.
It also
relieved the government as the increased cash flows would reduce the burden on
the Union Budget 2013-14 that an ailing Indian Railways might have posed so
that the government could spend more on its populist dole-outs.
But,
mere increasing the passenger fares was not enough to address the issue. Indian
Railways needs much more to improve and modernize its network and infrastructure.
The whole world, and the obvious comparison with China’s
large network of high-speed trains, is putting India in poor light.
But,
when the primary concern was of survival, who was going to think of modernizing
and competing at the level of most modern technological innovations in the rail
transportation?
The
need of survival asked for increased revenue or increased funding by the
government. Now a government, hard-pressed for funds, and all out to collect
funds to fund its populist measures in an election year, could not have
afforded much.
The
other way was increasing the sources of income. The only immediate option
available was hiking the fares. But the present administrators of the
Indian Railways with the outfit being the lifeline of the country directly
affecting the life of almost every Indian, too, were not in a position to do so
in an election year. That would sound too unpopulist. Isn’t it?
So, in
order to sound populist and people-friendly, as well as to increase the options
of revenue generation, the UPA government decided to take the back door.
Hiking
passenger fares is a sensitive issue as it directly affects the consumers and
may invite negative sentiments from the lower income groups – a gamble not to
be taken in an election year.
The Indian
politicians believe perceptions play a major role in the electoral battles.
But, what if it is a do-or-die situation for the Indian Railways?
So,
squeeze him (the common man/the voter) out indirectly. Let him be in the
perception that the fares were not hiked again. As for the other price hikes,
the UPA government believes (wrongly) that it would be able to sail over the
troubled waters by launching its populist schemes.
By the
time, the voter would come to realize these back-door games, the elections
would already be over.
The
Railway Budget has increased the ticket prices indirectly by increasing rates
like reservation charges, Tatkal charges and fuel surcharges. As expected, the
‘sleeper class’ has been given the least hike, but the consumer here too, has
been duped by the other indirect tariff hikes.
The
real killer is the proposal to hike the freight charges as well as its linking
with the fuel and energy price variations. So, be ready to pay more each
time the diesel or power prices are raised.
Indian
Railways, though has a relatively low share of freight, i.e., 20 per cent,
around 32 per cent of the Kerosene, diesel and LPG is transported through the
Railways.
As the
fuel prices are now deregulated and market controlled, expect more of regular
periodic hikes in prices of fuels and so of the dependent commodities, from
foodgrains to consumer durables.
Periodic
hike in the fuel prices would increase freight charges increasing prices of the
commodities being transported through the Indian Railways. The increased rail
freight rates would, in turn, further increase the fuel prices. That would,
indeed, be a vicious circle for Manmohan’s ‘aam aadmi’.
But
that is indirect and Mr. Bansal has followed one of his predecessors Lalu
Yadav, who did many such back-door things, like Tatkal pricing or break-journey
rules, to increase revenue figures, that ultimately, squeezed out the common
passenger.
What
Mr. Bansal has done goes one step ahead. He has not only squeezed the common
passenger but has also pressed hard the common man, by introducing the measures
that would not only increase the ticket prices, but would also cause price
increases across the spectrum of commodities linked with fuel prices and rail
transportation.
So, the
Indian Railways would be able to manage better and the UPA government will
have greater space to manipulate the resources towards the schemes like the
direct transfer of cash subsidy or food security or farm debt waiver.
And
don’t think much about many loud-mouth claims of new projects, new trains and
new concepts – they are just written and spoken to be forgotten. There is no
set deadline and timeline for their implementation. In fact, they are just used
to decorate the dull and routine fallacies like this Railway Budget.