The Economic Times reports

Railway minister Lalu Prasad Yadav has done it again. This year’s rail budget has cut fares and freight and announced 63 new trains, significant concessions for women, students and porters, ‘world-class’ railway stations and other amenities, besides a fancy IT initiative that includes smart cards for suburban Mumbai passengers. And yet, it has projected healthy financials and substantial investments to enhance the railways’ carrying capacity and productivity.

And we are told its not all election rhetoric

the railways’ report card in the current fiscal shows a sharp reduction in accidents, cash surplus of over Rs 25,000 crore, record return of 21% on capital, 31% increase in Plan spending and 15% rise in traffic earnings on the basis of just 8.6% rise in freight volumes. The operating ratio—operating expenditure as a proportion of revenues (lower this ratio, more efficient the railways)—is down to 76.3%. The operating ratio had climbed to unsustainable highs in the first two years of this decade—98.3% and 96%—under the previous NDA dispensation

But there were some goodies tucked in for good measure

Lower passenger fares, 50% discounts for women over 60, free monthly season tickets for students, cut in freight for certain commodities, introduction of 63 new trains, including 10 new garib raths

There was some Communal Socialism too on the Lalu Gravy Train

 a direction has been issued to set up minorities cell in the railway board and zonal railway offices for “promoting minorities’ welfare and ensuring their adequate representation in services”. Urdu has also been made a medium of examination for Group D posts.

And some that the ET calls post-dated cheques

discharge-free green toilets, introduction of stainless steel coaches, investment of Rs 2.5 lakh crore and route-wise development of high-density networks

The Indian Express in its lead editorial summed up the secret behind the report card and the largesse

The key that has unlocked the potential of Railways can be compressed into four words: low per unit cost. This strategy has allowed Lalu to lower costs, both passenger and freight, and make money from volumes

It also had more statistics to tout

 Of the Rs 250,000 crore investment in the 11th Plan, Lalu hopes to attract Rs 100,000 crore through PPPs ….The Rail Land Development Authority, an organisation we thought had turned defunct, would raise Rs 4,000 crore by making commercial use of Railways land. All told, 25 per cent of the Rs 100,000 crore PPPs would happen in 2008-09……Indian Railways Finance Corporation is expected to raise Rs 6,907 crore from the market to part-finance the plan outlay of the Railways in 2008-09; beyond the budget, the RITES IPO is likely to hit the market this year

So if the Indian Railways monopoly, a Rs 72,755 crore one at that as the Indian Express puts it, is performing so well, what is it telling us ?

First that there is immense demand in the Indian Economy for Rail Transport. This is the demand that the rest of us creating by merely going about by our daily business.

Second that there is a premium the Indian Economy is paying to the Rail Transport Monopoly to have this demand fulfilled. So the rest of us are quite happy to pay what we pay for goods and services that rely on Rail Transport so that we can feel good that time of the year in March when the Railway Minister takes centerstage in the Parliament to take credit for how the rest of us are keeping him in business .

Third, it is telling us that if a monopoly run by the Government Bureaucracy with a populist politician at its helm can perform this well, one can only imagine how much more efficiency and economies of scale a professionally operated Public Enterprise can achieve. We are not even talking about opening up the sector to competition and allowing private players in.

Fourth it is telling us that irrespective of which side of the political divide we belong to we are unwittingly subsidizing the politics of populism of the Railway Minister in office by generating this immense demand for goods and services hawked by his Ministry.

Fifth and lastly it is telling us the kind of society we are. We as a society have set such low expectations of our public institutions that rather than demand maximum value to us, the consumers of Rail Transport, we are quite happy sustaining a political monopoly with its attendant entitlements and patronage.

Offstumped Bottomline: It is time the media and the rest of us took a “morning after the railway budget” pill and realize the better the Railways perform the stronger the reason to disband the Railway Ministry. It is time we as a society raised expectations of our Public Institutions to demand that the performance of the Railways be measured not on how much revenues were generated to subsidize populism of the Government of the day but instead on maximum value delivery to us the Consumers of Rail Transport. That can only happen by shunting out the Minister from having a free ride on the Railways gravy train.

Originally posted here

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