Railway minister Lalu Prasad's interim budget for 2009-10, presented to Parliament on 13 February, revels on performance of the railways over the last five years but this is mainly because of rising volumes of originating traffic offering during a period of the economy's high growth cycle.

True, Railway no longer defers its dividend obligations but continues to depend on budgetary support though its share is somewhat lower in financing the Plan. At the same time, ordinary working expenses have also risen. The cost of implementing the Sixth Pay Commission recommen-dations had risen to Rs.13,500 for the 14 lakh employees and 11 lakh pensioners during the current year as against the Rs.5000 crore originally estimated.

Impact felt from slowdown

Railway earnings have been on upward curve with the secular increase in freight and passenger traffic but economic slowdown has already affected commodity movements such as iron ore for export, steel and container traffic. It would be difficult to hit the target of 850 million tonnes for the year with April-January figure at 681 million tonnes. But the Minister, with his characteristic sound-bites, has talked of even surpassing it.

For a year (2009-10) which would not see an early economic recovery, the Railway has set a target of 910 million tonnes as basis for the projected revenues which looks overestimated, while expenditure could turn out to be larger. We have to see the post-election dispensation and whether Prasad will be back at the helm to keep the railway 'ascending new highs.'

The Minister predictably laced his speech with some entertaining couplets but also used the occasion to underline his political stature and strengthen his home base where he is no longer the king. 'scaling new pinnacles,' 'historic financial turnaround,' and 'out-of-the-box thinking' were some trademark expressions to drive home what has been achieved under his leadership.

Efficiency at high levels

There is no doubt that he proved equal to the job in a portfolio he had sought and secured and remained a strong ally in UPA government. With all the surpluses, efficiency of rail operations also seems to have improved. But operating ratio, an indicator of efficiency, is 88 per cent in the current year, according to revised estimates, and is estimated even higher at 89.9 per cent for 2009-10, a throwback to the 1990s.

On present indications, the financial position of the railways in the coming year would not be so good when the economy itself is unlikely to grow more than six per cent. Since bulk of revenue earnings flow from freight traffic, which helps subsidise under-recoveries in passenger and coaching earnings, Prasad could have extended a few concessions in freight to keep traffic flowing close to average.

Railway has to finance massive investments during the Eleventh Five Year Plan, with three years left, and several major projects have been taken up like the dedicated freight corridors, apart from the continuing need to invest increasingly on track renewals, gauge conversion, electrification and modernisation. Railways had over the years failed to tap adequately resources by entrusting peripheral infrastructural projects to private sector on a significant scale. So there will be increasing reliance on extra-budgetary resources, especially borrowings on the capital market.

Conditions of travel must improve

With all his assertions about making railways customer-centric, rail travel remains a hazard for millions. Overcrowding apart, with the rapid growth in travelling public, cleanliness is something sorely lacking on most trains and railway platforms. Rebuilding stations and giving a more modern look may be done in the name of passenger convenience but conditions of travel must improve a great deal.

In a pre-election season, Prasad has been generous to passengers by announcing one more concession to remember before the elections - a reduction of Re.1 to Rs.2 on tickets of value up to Rs.50 and more than Rs.50 respectively. The two per cent give-away applies to air-conditioned classes as well.

Prasad has also made no secret of where his interests lie. In every budget, he has taken special care of Bihar through new trains or surveys or service extensions, increasing train frequency, or routing of super fast trains through his state. Significantly, he got a rail wheel factory located at Chhapra, and diesel and electric locomotive works planned at Marhoura and Madhepur. Two wagon factories at Mokama and Muzaffarpur would also be transferred to the Ministry of Railways. In the latest budget, he has created two new divisions, one located at Bhagalpur.