During its first five-year stint in a quest to reform railways, the Modi Government merged the Rail Budget with the General Budget on September 21, 2016, ending the 92-year-old practice of a separate rail budget on the grounds of promoting a more efficient and agile railway. The major argument of the merger is that a major pool of resources in any circumstance for the modernisation of railways came from the finance ministry, while the railways have been generating surplus revenue from cancellations and the dynamic pricing introduced in 2016 as a step towards improving the railway’s financial health.
If one carefully observes the trends of earnings from ticketing for the financial year 2019, t a lot of differences can be spotted in the current fiscal year, until August and earnings during the month of August. The total tickets booked have seen a reduction of 3.08%, with the number of tickets booked reducing from 1,72,10,197 to 1,66, 80, 437 and a 3.66% reduction in the total number of passengers reducing from 3,10,03,911 to 2,98, 70,125 for the month of August.
A similar impact can be seen from the overall perspective for the months upto August in the fiscal year of 2019-20. This may not seem too immense an impact at the macro level, but the effects of such a shift are being greatly witnessed at micro-level management. In the perspective of railways, I am referring to the zonal level with Southern Railway being the first zone to report financial crunch, with sub-normal profits bearing potential to impact the non-core operations of the Southern Railway zone acting as a deterrent to passenger traffic further and providing an impetus to mushrooming Low-Cost Carriers, which is of grave concern for a mammoth organisation like the Indian Railways
Change In Economics Post The Rail Budget Merger: A Caution Signal?
Here is a short description to understand the history of the rail budget so that the very topic of the change in economics can be better understood.
This is a practice, which is not new to the Indian Administration, the railways in particular. Prior to 1924, the practice of a unified budget was practised by the colonial administrators. But the practice had a downsloping effect on the financial sustainability of the railways as consequent wars and disproportionate expenditure in warfare often led to the breakdown of railway administration.
Numerous Committees were constituted to suggest rationale measures in helping clamp down on irrational expenditures and bring the finances into control. The real solution could be ascertained only after the constituting the Ackworth Committee with William Ackworth at the helm of affairs in 1921, which on September 24, 1924, or what is known as the Convention of 1924 brought a revolutionary change in the railway budget practices.
By recommending the separation of railway budget from the general budget, this became the custom for the next 92 years, when the railway budget was one of the most anticipated budgets in the transportation sector. Now, why is there a stark contrast in the Railway Budget and the Newly Merged Railway Budget? One of the reasons being the comprehensiveness of the budget. When we examine the budget prior to the merger, the railway budget was symbolic of the blueprint for the next five years of the railway spanning across domains of railway operations, representing the holistic development of railways, though it might be interpreted by some as a populist document and vice versa post-merger.
The first rail budget presented after the railway budget merger was a caution signal for the Indian economy as the budget lost its comprehensiveness and as we might feel safe to say, the rail budget was presented more in an abstract from than comprehensiveness it earlier exhibited with just the outlay for future projects, which has left a vacuum between the past, present and the future development goals of the railways and providing greater room for speculations for the opposition and the economists alike.
I, therefore, have a completely different perspective of the rail budget as an individual unit if it was to be reformed. The rail budget, as observed by a journalist, was more an affair of riddles, jokes and on-spot demands, gravely impacting the magnitude of the very budget. Although the real reform lay in making it a solemn occasion, with a greater focus on highlighting the goals achieved, goals set, and the resulting expectations from the goals set for the next five years.
It should also include what we failed to achieve and how we plan to rectify shortfalls while holding detailed discussions through a healthy yet mutual conversation on what is the roadmap to achieving the goals.
It is to be understood that irrespective of the side of the parliament you sit, there is always scope for learning from the past experiences by seeking adequate inputs from the people who have been part of the policy process in the Ministry of railways, which is not the case in India. This is an unfortunate event and stands to be rectified.
This year’s rail budget should have focused on both, the micro and macro level, which would have made it truly reformative measure and perhaps helped in preventing a crisis like situation which the Southern Railway Zone has currently landed into. While on the whole, it is to applauded for the fact that the railway administration has seen a greater reform in the approach towards work at different levels at the micro-level.
In order to achieve an efficient budget post-merger, there exist two solutions, which could be as follows: The first solution would be the outlining of zonal allocations based on demands raised by the respective MPs from the states, where these zones are situated, and revising the budget accordingly in pursuance with the discussions on the demands raised. The other alternative feasible in such a situation would be seeking the inputs of the zonal authorities, which would mean the General Managers who are better equipped to understand the demand and supply situation in their zones, inclusive of suburban projects (which include metro rail if in progress in the respective zone) thus helping provide a comprehensive budget.
Rail Budget: The Road Ahead
The real essence of efficiency therefore as stated from the discussion above doesn’t lie in curtailing the comprehensiveness of the budget report, but it lies in having voices of the competent individuals at the helm of affairs at the micro-level. There needs to be a discussion at the zonal level before the implementation of the budget. The budget in a real sense is just a tentative idea of the scheme of reforms slated to be implemented, but given the role of the legislature in monetary matters, it is treated as final and implemented in a superficial manner. The Rail Budget thus as a merger or individual unit fails to achieve its objectives and thus the current Southern Railway’s situation always stands a chance to sprout in such circumstances