Railway minister Suresh Prabhu chose gradualism over a big-bang approach on Thursday, fusing entrepreneurship with populism in a Rs 1.21 lakh crore investment plan as part of a broad strategy to turn the network into an efficient and profitable organisation.
Prabhu kept fares and freight rates unchanged in the railway budget for 2016-17, but announced new types of trains aimed at catering to the needs of passengers across the income scale. He announced the launch of Antodaya Express, a long-distance, fully unreserved, superfast train service for the common man to be operated on dense routes.
Additionally, the railways will add Deen Dayalu coaches in some long-distance trains for unreserved travel. Another three new services — Humsafar, Tejas and UDAY — are aimed at the relatively well-off passengers.
The second budget of Prabhu, a chartered accountant, had a tinge of political undertone. Two new dedicated freight corridors will connect a crucial industrial town in West Bengal — Kharagapur — to Mumbai and Vijaywada, respectively. The third will run from Delhi to Chennai. A dedicated auto rail hub will also come up in the southern metropolis.
The projects were announced weeks before assembly polls are to be held in both West Bengal and Tamil Nadu. Prabhu, who was hailed for adopting a business-strategy approach to turn around the decrepit 163-year-old network, placed the focus firmly on passengers, announcing a raft of amenities.
These include allowing passengers to cancel tickets by calling in at the dedicated telephone number 139, installing 17,000 hi-tech toilets on trains, rolling out Wi-Fi services in hundreds of stations and professionalising millions of porters or “coolies” by training them in soft skills and renaming them “sahayaks” (helpers).
Prabhu, who laid out a Rs 8.56 crore five-year turnaround plan last year, had very little room to splurge given a ballooning wage and pension bill on account of the 7th pay commission payouts.
“New revenues, new norms and new structures need to be evolved,” Prabhu said in his hour-long speech.
The minister made it clear he was about to tap earning sources away from passenger fares and goods traffic.
“The business-as-usual approach will have to be abandoned. We need to find new sourcing to fund projects by firming up joint ventures with states, developing new frameworks for PPP, scouting international markets for rupee bonds or by engaging with multilateral and bilateral agencies,” he said.
The railways have targeted to earn Rs 1.84 lakh crore in 2016-17 of which Rs 51,012 crore is expected from passenger fare revenues, a 12.4% rise over last year.
This would imply the railways will have to be able to wean a greater number of passengers from airways, a challenging prospect as low jet fuel prices are expected to keep airfares low.
Against the targeted operating ratio (OR) — the money spent to earn a rupee — of 88.5% this fiscal, the railways are likely to log an OR of 90% while the figure has been pegged even higher at 92% for the next fiscal.
As strategies to yank out the world’s fourth largest rail network from its current state of financial crunch and administrative inertia, the minister is looking at bringing in policy reforms to promote innovative business strategies incorporating opportunities for private and foreign investors as also start-ups to enable the railways to regain the freight market share it has been consistently losing to roads, airlines and pipelines.
Aiming to ramp up non-fare box revenues of the railways from the current levels of around 5% to the global average of approximately 20%, Prabhu elaborated asset-monetisation plans through the launch of schemes such as re-development of stations and opening up of the Indian Railways Catering and Tourism Corporation website to e-commerce activities.