It is unheard of a business that has a monopoly,
that has nearly 125 crore customer base,
that has 100% sale on advance payment;
but still starved of funds.
This, Madam Speaker, is the story of Indian Railways so far.
That is how rail minister Sadananda Gowda described the state of affairs at the Indian Railways during his budget speech in Parliament this morning. In his speech he quoted Kautilya, Mahatma Gandhi and Kannada poet Mankutimma.
But it was not all verse. Gowda came armed with numbers and marshalled them effectively to make his arguments. These numbers give a glimpse into the sheer operating scale of India’s rail network and the fiscal quagmire it has gotten stuck in.
The size of the Indian railways
Indian Railways run 12,617 trains to carry over 23 million passengers every day connecting more than 7,172 stations spread across the country. “It is equivalent to moving the entire population of Australia,” Gowda said. India has a total track length of 1.16 lakh kilometers, 63, 870 coaches and more than 2.4 lakh wagons. The railways employs more than 13.1 lakh people. Every day, around 3 million tones of freight is being carried on 7,421 freight trains.
This means that most of the money earned is spent on the maintenance of this vast network, fuel prices, salaries and pensions. In 2013-14, 94% of gross receipts were spent on such things.
Gowda said the government spends 94% of earnings on operations, leaving a surplus of just 6% to invest in capacity addition and infrastructure. It has been on a continuous decline. The surplus after paying dividends and lease charges in 2007-08 was Rs117.54 billion. It is currently around just Rs6.02 billion.
The focus of the railway ministry has been to sanction new projects instead of completing unfinished projects, said Gowda. Every government and railway minister announces projects to please the constituencies they care about, for the short-term bragging rights. These projects eventually languish, as subsequent governments cut funding. Around 676 projects have been okayed in the last 30 years amounting to Rs 1.60 trillion. Of the 676 projects, only 317 projects could be completed and the remaining 359 projects will need a cash infusion of Rs 2 trillion, Gowda said.
Fare hike insufficient
Given the severe cash crunch Indian railways faces, Gowda said increasing the fares was necessary. It is estimated to bring revenues worth Rs 80 billion. But this is loose change if we look at the grand plans of the railways. It needs more than Rs 9 trillion to complete the ‘Golden Quadrilateral Network,’ that connects the four metropolitan cities of India and Rs 600 billion to introduce just one bullet train. There is a separate “diamond quadrilateral” in the works. That is a network of high-speed trains.
Budget estimates for FY15
In the budget presented today, Gowda pegs the total traffic receipts to be Rs 1.64 trillion and total expenditure to be Rs 1.50 trillion. Gowda kept aside Rs 1.12 trillion for ordinary working expenses, Rs 151 billion more than previous year.