Indian Railways: Living In Dreams

Indian Railways is changing track, giving up its separate Budget and experimenting with surge pricing on three popular trains. That leaves the behemoth with no funds to replace ageing assets and encourage further investments.

- MC Banga

Railways, perhaps along with post offices, are the only two institutions in India with a deep network which if tapped judiciously can create substantial improvements in the hinterland. Railways was always considered only as a mode of transport in our country, we want to see Railways as the backbone of India’s economic development.

Foreword by Prime Minister Narendra Modi in the Indian Railways White Paper dated 24 February 2015

With these stirring words, Modi emphasised that Indian Railway is the engine of growth for the nation. One-and-a-half years later, experts are asking whether the engine is capable of hauling even its own weight, let alone hoisting the burden of economic development on its shoulders.

Consider the financials. Consequent to acceptance of the Seventh Pay Commission report, Railways will have to bear an additional burden of ₹40,000 crore. This will lead to its balance sheet, already worn thin, developing a big hole in the centre. There is no way that Railways can meet this massive burden considering its current trends of revenue and expenditure. The expected revenue earning by the railways is of the order of ₹150,000 crore for the year. Currently, it has an operating ratio of 93, meaning out of every one rupee earned by the railways, 93 paisa is spent as operational expenses. The remaining 7 paisa, amounting to ₹10,500 crore of the total, is surplus.

Mind it, this ‘surplus’ is what should ideally be used to carry out regular maintenance work and replace its aged assets, thereby ensuring passenger safety. On condition of anonymity, some officials from the Railways say that General Managers of different railway zones are cribbing that they have funds only for jhadu-pocha (sweeping-mopping) of platforms, nothing to carry out any infrastructural improvement.