Railway Budget 2015: A five-pronged strategy to revive Indian railways?

In a bid to recondition the Indian Railways, Rail Minister Suresh Prabhu has presented a five-pronged strategy to turn the fortunes of the Indian railways.

The Union Minister has asserted that the government will be focused on building new partnerships as well as leveraging additional resources to achieve this.

Adopting a mid-term approach

“Any organization must address short-term priorities without glossing over the long-term and medium-term vision…The first in the series is the White Paper that has been placed today for the information of the House. The second part is today's Budget for the year 2015-16. This will be followed by a Vision-2030 document that we intend to bring out later this year. The proposals contained in this Budget should, therefore, be seen as the beginning of a Five Year Action Plan to transform the Railways,” said Rail Minister Prabhu.

Building partnerships

The ministry plans to work closely with state governments as well as different agencies of the public and private sector to transform Indian Railways. While the railway will involve the state government, simultaneously, it will partner with PSUs to ensure that adequate capacity is built to ensure smooth transport of key commodities such as coal, iron ore, cement and others.

“…We will partner with multilateral and bi-lateral organizations and other governments to gain access to long term financing and technology from overseas. Finally, we will partner with the private sector to improve last mile connectivity, expand our fleet of rolling stock and modernize our station infrastructure,” he added.

Bring in new investments

Over the next five years, the ministry is expecting an investment of Rs 8.5 lakh crores in the sector. While the ministry is relying on the budgetary allocation to partly fund the railways, the government will also scout for potential investors to meet its additional investment requirements.

“Finance also faces challenges of competing demands although a small initial contribution to railways can be catalytic. But the scale of our investment needs is such that it will require us to seek multiple sources of funding. We will tap other sources of finance. Multi-lateral development banks and pension funds have expressed keen interest in financing new investments. Their time horizon is aligned with ours. They seek sources of predictable and recurring revenue, which we can provide through the issuance of long-term debt instruments to fund revenue generating railway projects,” Rail Minister Prabhu noted.

Revamp management practices

In order to attract investments, Rail minister Prabhu emphasized on increasing both operational and business efficiency. And hence, he announced to bring in changes in the decision making processes of the organisation.

“I propose the operating ratio for 2015-16 at 88.5% as against a targeted operating ratio of 91.8% in 2014-15 and 93.6% in 2013-14. I am pleased to state that not only will this be the best operating ratio in the last 9 years… The Railways will not be able to deliver sustained improvement in operating efficiency unless changes are made to speed up decision making, tighten accountability, and improve management information systems,” he averred.

Better governance, enhance transparency

The rail minister in his budget speech has also highlighted that the ministry will work towards setting high standards of governance and transparency. He said that the decisions taken by the management of Indian Railways must be fair to all the stakeholders.

“My first decision as a minister was to delegate all my tender approving powers to the level of general managers. Transparency has many dimensions. It requires better quality of information gathering within that system and improved norms for disclosure of that information. It requires reduction of discretion and standardization of procedures. It requires accountability,” stated Rail Minister Prabhu.

He further added, “Apart from delegation of powers, I am proposing to undertake measures with a view to bringing in transparency in the day-to-day activities benefitting the common man.”