As has now become normal practice since September 2016, the Railway budget as a separate entity which was the norm for decades has been done away with. It now forms part of the annual general budget and is therefore not a prime focus of attention.
Yet, it would be naive to underplay the importance of the Railway Budget given the scale of operations and the massive employment the Railways provides.
That Railways and Commerce minister, Piyush Goyal, has resolved to seek private investment in some areas to improve efficiency and to meet the whopping Rs 50 lakh crore funding needs of the Railways in the next 10 to 12 years heralds a new initiative and will be watched for its success or failure.
Goyal has, indeed, given indications that the government would ease norms to attract foreign investment into some areas in the Railways. It is truly a daunting challenge but with a strong well-mandated government in office, this is a good time for some degree of experimentation, albeit cautiously.
Public-private partnership (PPP) has been tried earlier without encouraging results but this time around it needs to be tried the whole hog with deep focus. The Modi government at this point has the advantage of enhanced credibility, having won the general elections with a heavy mandate, virtually decimating the Opposition.
Currently, the Railways’ finances its capital expenditure largely through budgetary support and some loans in the form of extra-budgetary resources. Since some big-ticket projects are envisaged under a new model of private engagement, the dependence on the PPP route is all the greater.
High-speed rail could be a focus area for PPP but it would require imaginative packaging of policy and close monitoring. The investment involved would be huge indeed.
It is a major challenge for Finance Minister Nirmala Sitharaman who is new to the coveted Finance Minister chair and to Piyush Goyal whose ministry would handle the bulk of the work in this direction.
That there is no move to privatise the Railways is as it should be but it is vital that the PPP partners of the government not be allowed to take the behemoth for a ride to appropriate disproportionate gains. A tightrope walk would be needed to attract investors and yet not lose governmental control over the Railways resources.
Nirmala Sitaraman’s budget talks also about investing more in suburban railways. That is a sound objective but the viability of new projects must be kept in mind. It is indeed wrong to assume that this is not a bold budget.
The real test would be in implementation and it would be a tragedy if the PPP model is messed up like how demonetisation became a disaster, though its intentions were sound. It is also strange that Nirmala Sitaraman did not spell out the allocations to various schemes and departments in the budget this time around.
Part A of the budget speech was, therefore, virtually devoid of specifics and of key statistics. Whether this was an index of the complacency that may have set in due to a considerably weakened opposition is a moot question. It is indeed important that the accountability of the government be not diluted.
The Finance Minister indicating that those interested in allocations must go through the annexures to the budget is not conducive to transparency. It is important that allocations to various departments be laid bare and debated in Parliament.
With the figures left to the members to study and then comment on, an opportunity for informed discussion is lost. Some hard decisions on corporate taxation and taxing the rural high-income section may also be called for.
While the budget this time has taxed the super rich somewhat more, a dispassionate new look at raising resources from the high-income groups without having to bother overmuch about vote banks may well be in order.
For the financial year 2019-20, capital expenditure for the Indian Railways has been pegged at Rs 1,60,176 crore. The amount is 20 per cent higher than that of the previous year. According to the
Finance Minister, the infrastructure of Indian Railways would need an investment of Rs 50 lakh crore between 2018 and 2030. While a foreign investment can contribute, serious thought needs to be given too to fresh resource mobilisation and cost-cutting.
By S Sadanand
