The Railways budget

D.J. Narain, Additional Director General, Public Relations, Railways, writes:

This has reference to the article “Subterfuge as policy” ( Frontline , February 26, 2021) by Mr R. Elangovan.

The write-up, in general, seemed to be biased against the Railways and ignored the adverse impact of the COVID-19 pandemic on it. Except for the COVID-induced fall in passenger revenues, the Railways has exceeded all expectations in spite of about four months of nil economic activity in the current financial year. On February 28, 2021, it crossed the cumulative freight loading level for the same period in the previous financial year.

The article says that the Railway Minister was criticised roundly during the pandemic for abandoning millions of migrant workers facing the crisis. This is not true. The Indian Railways, under the leadership of Shri Piyush Goyal, undertook one the largest and globally acknowledged human evacuation missions in history, transporting more than 63 lakh stranded migrants to their respective States through Shramik special trains.

The comments about V-shaped recovery in the write-up are misplaced.

The Indian Railway’s freight loading has shown a V-shaped recovery after falling to 65 per cent of the level of loading in April 2019-20. It has continually risen in subsequent months and crossed last year’s level since August 2020. The recovery is so good that by the end of FY 21, the Railways is slated to cross last year’s freight level loading comfortably. The freight loading in 2021-22 is slated to increase from 1,210 MT to 1,270 MT.

The writers’ views on the gross traffic receipts have not factored in the impact of the coronavirus at all. Railways is a derived demand, and hence the impact of the lockdown on the Indian Railways was visible on its operations. The challenges before it got accentuated with a drastic fall in passenger revenues.

The year 2020-21 was a difficult one. The compound annual grown rate for Budget Estimate (B.E.) 21-22 over 2019-20 is 11.5 per cent, which is achievable. Even the freight segment recorded a growth of 11 per cent over Revised Estimate (R.E.) 2020-21. Any growth in the economy impacts the demand for railway freight and such growth has been factored in. Passenger revenues have remained the same as B.E. 2020-21.

The comments on capital investments show a lack of full appreciation about the Indian Railways’ ongoing process of transformation. It has not only maintained its capex targets in the R.E. of the Budget but is also on its way to meeting them. However, to offset the reduction in global business services for project financing, a provision of Rs.51,000 crore (not Rs.41,000 crore as mentioned in the article) has been made under Extra Budgetary Resources (Special) as a one-time arrangement. As such, despite a decrease in the GBS’ [Gross Budgetary Support] share of project financing, the Railways has been able to sustain the capex size at a level more than that of B.E. 2020-21.

The General Budget 2021-22 was momentous for the Indian Railway. It witnessed a “record” budgetary allocation of Rs.1.10 lakh crore, with total capital expenditure outlay of Rs.2.15 lakh crore for 2021-22.

As far as the Rashhtra Rail Smarakshana Kosh (RRSK) is concerned, the Railways is set to prioritise works and incur expenditure in such a way that sufficient funds to important safety works are ensured.

The author’s comments on special loans are not based on full facts and understanding about the Railways’ abilities. It is quite confident of generating adequate internal resources to be able to repay the loans.

Regarding the comment on reduced fuel expenditure, we wish to state that the Railways is on a mission, perhaps the biggest of its kind in the world, to make itself carbon neutral by 2030. It has invested heavily in electrification over the years. It will be electrified 100 per cent by 2023.

The writer does not seem to know the basic difference between the National Infrastructure Pipeline (NIP) and the National Rail Plan (NRP). The NIP for FY 2019-25 is a first-of-its-kind, multi-Ministry, whole-of-government exercise to provide citizens with world-class infrastructure and improve their quality of life. The NRP, on the other hand, is an exclusive Indian Railways plan to create infrastructure by 2030 keeping the year 2050 as the horizon.

As far as the operating ratio (OR) is concerned, it is just one of the parameters used to measure the Railways’ performance. Comparing the OR of a year where a pandemic has impacted humanity with a normal year’s OR is not fair. The Railways subsidises the passenger costs by almost 50 per cent. The figures quoted in the article do not reflect factors such as the quality of passenger services, safety, punctuality, faster and customised freight operations, and unprecedented capacity expansion.

R. Elangovan writes:

W ith reference to Mr D.J. Narain’s rejoinder, I have the following points to make:

The author seems to conflate the interests of the Railway establishment with the welfare of the organisation. For the record, nothing in the article is aimed at tarnishing the reputation of the splendid organisation.

His claims about Indian Railways’ efforts to transport poor migrant workers during the pandemic are not true. About their plight, there have been extensive reports in the media, including Frontline (“Nightmare on Shramik trains”, June 19, 2020).

Instead of referring to the absolute numbers on freight loading, as Mr Narain does, I would just point out that even going by the numbers he cites the increase is likely to be less than 5 per cent.

Regarding capex targets, Mr Narain’s point is exactly the same as the one I had made—that the burden of the shortfall is being transferred from the general budget to an area outside it. I stand by what I wrote in the article.

It would help if the Railway establishment explains what is “special” about the extra budgetary support that is supposed to fill the huge hole left by the collapse of budgetary support to the Railways’ capex plans in 2020-21.

My understanding of railway finances is that there are only three such sources: bond flotations by the IRFC [Indian Railway Finance Corporation], institutional finance and private participation.

Of course, the NIP and the NRP are different. That is why I took care to consider only the rail component of the NIP in order to make valid comparisons with the NRP. The numbers cited were to drive home the point that the Indian Railways has been shifting goalposts, which makes it impossible to evaluate performance against targets previously set.

Mr Narain claims that the Railways is on a mission to reduce its carbon footprint. In the absence of any data, it is difficult to assess the truth of his claim.

The operating ratio is, of course, just one piece of statistics. But Mr Narain has not furnished the other statistics that would buttress his point and counter the figures I had cited.

Mr Narain is silent about the shortfall in the pension account. Also, how does he explain the shortfall in 2019-20 when the COVID-induced stress was nowhere in sight?