Railways should get budgetary support for its subsidies

Railways should get budgetary support for its subsidies

The Prime Minister’s Office has reportedly directed the finance ministry to make good recurring losses of the Railways in operating several non-profitable strategic lines in hilly, coastal and backward areas. It points to a welcome change of track in rail finances, but a lot more traction is warranted for the Railways to gainfully and sustainably meet its social obligations. The expenses on strategic lines is but a small fraction of the total social service obligations of the Railways, estimated to be over Rs 34,000 crore annually. They should get this money, just as state power utilities are supposed to get from the Budget the subsidies they give farmers.
Following the merger of the rail budget with the Union Budget, the practice of reimbursing the Railways for operating the non-viable strategic lines had been questionably discontinued. However, going forward, the entire social service obligation of the Railways surely needs to be financed by three tiers of government: the Centre, the concerned state and possibly municipal bodies. There is no reason why, say, in Mumbai, subsidy, if that is needed, on suburban rail services cannot be entirely locally financed. The way ahead for the Railways is to follow commercial accounting practices to duly keep tab on social costs. In parallel, we do need independent tariff setting, and gradually need to put in place a plan for competitive rail services, along with common track and signalling systems.
To fast-track the modernisation of the Railways, the costs of meeting attendant social obligations need to be speedily reimbursed. It would then make it possible for the Railways to better allocate resources for revamp and express upgradation of facilities, and, in the process, opt for modular investments. True, the Railways must, in tandem, boost non-fare revenue and rationalise overheads and sundry costs. But without transparently accounting for and meeting social costs, the Railways would fall short in its economic role in transport and haulage. We must seek clear objectives and not merely muddle along the beaten track of populism and giveaways.