Nirmala Sitharaman’s so-called budget with infrastructure thrust is a myth and if you break the seal of fine prints in comparison with those of the past you get many revelations.

As far as the rail infrastructure is concerned it has been underinvested with total neglect in renewal of existing assets and augmentation of existing capacity. Mr. Suresh Prabhakar Prabhu as the then minister of railways in his budget speech for 2015-16 announced that the infrastructure has been neglected very badly and needs to be strengthened and expanded in order to increase the average speed of goods trains from 25 kmph to 50 kmph and of passenger trains from 50 kmph to 80 kmph and to attain 95% punctuality. He also stated that railway’s share of freight in the country must be increased from 29%% to 45%. He reported in his white paper on railways that there were 5300 kms of track arrears for renewal which is the main cause of derailments and accidents. According to the paper 4500 kms of track becomes due for renewal every year but only 2500 to 3000 kms are renewed every year. He, after winding up the 12th five-year plan midway, announced a plan for 2015-2019 with an outlay of 8.56 lakh crore rupees to fulfil the above objectives. Accordingly, every year starting 2015-16 Rs 1.71 lakh crore should have been spent. But the following were the ‘Actuals’ as per budget documents:

Year 2015-16 2016-17 2017-18 2018-19 2019-20
Actuals Rs in Crore 93519 109934 101985 133376 148064

After the merger of rail budget with General Budget since 2017-18, Mr. Arun Jaitely became the custodian of railways and continued the same objective. After the Interim Budget by Piyush Goel before 2019 parliament election in July 2019, Nirmala Sitharaman as finance minister announced in that budget that railways needs an investment of 50 lakh crore rupees during 2018-30 i.e. 12 years meaning Rs 4 lakh crore rupees every year. But 2019-20 actuals were only Rs 1.48 lakh crore. She did not present the honest appraisal of 2015-19 plan of 8.56 lakh crore investment for which only Rs 5.86 lakh crore had been spent in these five years. Even this figure is not to be relied on as the Extra Budgetary Support figures are not possible to be verified. Especially the investment from PPP  has no record to prove the figure as they need not be tallied.

In 2020-21 budget speech the FM announced that the goal is National Infrastructure Pipeline (NIP) announced by PM Narendra Modi in the Independence Day speech. In the budget speech she said it is for 5 years. But the NIP published by the finance ministry on 31st December 2019 proposed an 103 lakh crore rupees plan over 6 years for all infrastructure. According to the NIP Railways plan is for Rs 13.69 lakh crore. As the private sector is not forthcoming for investment in rail infrastructure despite many concessions, the NIP envisaged 87% of this fund i.e. Rs 11.90 lakh crore to be invested by central government through general budget support. But for the road sector, centre will invest only 25% according to NIP.

The following are the total  plan requirement year wise, along with the budgeted plan outlay (Rs in cr):

Year 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25
Plan on NIP 1,33,232 2,62,510 3,09,360 2,74,181 2,21,369 1,67,870
Plan Outlay (budget) 1,48,064 1,61,042 2,15,058 abandoned abandoned abandoned
87% of NIP 1,15,911 2,28,383 1,87,100 abandoned abandoned abandoned
Budgetary Support 68104 29000 (Revised from 70250 BE) 1,07,000

The budget support includes Rs 13000 crore  road safety fund collected from road cess on diesel and  transferred to railways for rail safety fund and Rs 5000 crore committed by central government for national rail safety fund. If this Rs 18000 crore is deducted from the above budget support it would mean far less for NIP than the 87% commitment.

It is well understood that the NIP is still halfway through. But Nirmala Sitharaman in this budget of 2021-22 has abandoned the NIP and has proposed an NRP, National Rail Plan to be executed in 30 years, between 2021-51 with an investment of Rs 38.5 lakh crore. Astonishingly, the objectives are the same as in 2015-16: to increase the freight share from 26% to 45%;to increase the average speed of goods trains to 50 kmph from 25 kmph and passenger trains from 50 kmph to 130-160kmph. Even the track renewal arrears have not been wiped out. At present there are 11000 kms of track renewal arrears. No increase in the physical out put of new lines, doubling etc. The following table shows how there have been no specific improvement despite their mega announcements.

2014-15 2100 300 700
2015-16 2500 813 972
2016-17 2487 953 882
2017-18 4023 409 999
2018-19 4181 439 2519
2019-20 4500 360 1458
2020-21 3200(RE) 300(RE) 1400(RE)
2021-22 4000 300 1600

For the next fiscal 2021-22 the capex 1.07 lakh crore has been budgeted which is widely appreciated. There is another revelation too. For the current fiscal the revised estimate of Rs 29000 crore is Rs 41000 crore less than the  budget estimate of Rs 70250 crore. If it is to be made good in 2021-22 the additional amount of Rs 60000 crore of 1.07 lakh crore is far less than the past allocations. Apart from this Rs 18000 crore is to be taken for rail safety fund. Where is the extra effort for the proposed NRP? For 2021-26 an amount of Rs 5,81,821 crore out of 38.5lakh crore is to be spent i.e. 1,17,364 crore annually.

They have not even met the safety target. After a lot of derailments and accident deaths a national rail safety fund was proposed named Rashtriya Rail Samrakshana Kosh RRSK. Rs 1 lakh crore has to be spent in 5 years on this i.e. Rs 20000 crore a year starting 2017-18. According to CAG this is a fund created from the same existing railway funds like rail safety fund obtained from Diesel cess as share of railways with Rs 10000 crore and Rs 5000 crore from Depreciation fund of railways both have been part of railway sources. Only infusion is Rs 5000 crore from GBS. This fund has to be used for renewal of existing assets like track renewal, signal renewal, bridge repair etc. But even this target has not been met. According to CAG report and the budget documents the following were the actual expenditure met by RRSK in place of Rs 20000 crore each year:

          Year Rs (in cr)
2017-18 16090
2018-19 18015
2019-20 15200
2020-21 17000

The next revelation is that of  unprecedented adverse operating ratio which has not been brought in the overview of railway receipt and expenditure. Operating Ratio (OR) is the percentage of expenditure on the income. The overview of the railway receipt and expenditure shows that the OR in 2019-20 was 98.36% and in 2020-21 was 96.96%. A question arises as to when the Gross Traffic Receipt is Rs 79 304 cr less in the revised budget from the budget estimate, how is the operating ratio almost the same as per the revised budget. The FM has shown Rs 75 604 crore less in the expenditure. Strikingly she has shown pension appropriation as only Rs 523 cr as against the budget estimate of Rs 53 160 cr. Again for 2019-20 also the actual appropriation on pension is shown as Rs.20708, cr. When we go in to the Demands for Grants presented for voting in the budget 2021-22 the actual for 2019-20 is shown as Rs 52,712 cr as against Rs 20708 shown in the overview. Revised estimate for 2020-21 is shown as Rs 54766 cr as against Rs.523 cr in the overview. The cat is out of the bag in the footnote of the overview. According to the footnote, the real operating ratio for 2019-20 is 114.19 and for 2020-21 it is 131.49.

“Due to Covid related resource gap, Railway appropriated/estimated to appropriate less than required amount to Pension Fund in 2019-20 and RE 2020-21. With required level of appropriation to Pension fund from Railway Revenues in Actuals 2019-20 and in RE 2020-21, the Operating Ratio would be 114.19% and 131.49% respectively”

Therefore, railway finances are bad and cannot create resources for large scale investment needed to NIP or NRP. As planned in NIP, 87% FUND HAS TO COME FROM THE GENERAL BUDGET SUPPORT. Then only the infrastructure can be strengthened for safety and expanded to meet the growing demand. As per CAG report the proposed LIC  loan of 1.5 lakh crore did not come as IRDA  has restrictive investment regulation. In the last 4 years only Rs 16200 cr came from LIC. RAILWAY HAD TO TAKE SHORT TERM MARKET LOAN OF Rs 49000 cr at a higher rate of interest. As seen from the experience, this government has been neglecting the investment and the infrastructure development has been very badly affected. The NRP also says that the private sector will not come for investment in railway infrastructure. It also says that government also does not have money to invest. China invests 11 times more than us. The speed of their goods trains is 350+kmph and passenger trains is 400 kmph, only because the government invests in railways

Neglecting the infrastructure development as in the case of NIP, the government implements only its privatisation recommendations.150 passenger trains are to be privatised by March 2023 and 500 trains by 2025. By 2025 30% of goods trains are to be privatised. The NRP says by 2031 there will not be Indian Railways run goods trains and entire goods traffic will be privatised. 90 important stations have been listed in NRP for privatisation before 2031. Dedicated Freight Corridor also will be opened for private players. Nirmala Sitharaman has announced in the budget that even the Dedicated Freight Corridor corporation will be monetised and disinvested and handed over to the private sector when it becomes operational. Already, Container Corporation is listed for strategic sale. It will be sold in 2021-22 as per the budget announcement.

Railways also cross subsidizes passenger loss by goods earnings. As per the CAG report in 2018-19 railways met a loss in passenger segment amounting to Rs 46000 cr. It earned a profit of Rs 45900 cr in the goods segment. And it cross-subsidised the passenger loss. In the UK and Russia central government meets the passenger loss according to NRP. In the absence of government subsidy if the goods trains go to the private sector the railway will not be able to give passenger subsidy. It cannot pay salary and pension. The NRP says only loss making second class passenger segment will be with the railways. Therefore, all profit is going to private sector and the loss is incurred by the government.

Finally, the infrastructure development will face serious problems, if privatisation is done at the cost of neglect of infrastructure development.

Nirmala Sitharaman has shown in the budget that there will be 14.4% GDP nominal growth in 2021-22. Railways’ targets do not match this. A perusal of Statement of Railway Receipts and Expenditure available on the railway website shows that even the level of 2019-20 is not expected in terms of net tonne kilometres. According to the statement, the goods traffic is expected to grow a meagre 1.03% over 2019-20 and passenger traffic 4.6%. Even these figures are not reliable when we find the comparison of fuel expenses. Without fuel, trains won’t run is common knowledge. The fuel expenditure will be only 82% of 2019-20 mere Rs 1200 cr more than the revised estimate of 2020-21 the pandemic period.

Year 2019-20 2020-21 BE 2020-21 RE 2021-22 BE
Goods million ntkm 7,07,665 7,18,548 6,60,492 7,14,961
Passenger million pkm 10,50,738 12,10,587 1,18,928 10,99,127
Fuel Expenditure Rs in cr 28,999 29,858 22,651 23,815

As far as the passenger trains are concerned, Railways are not interested in running all the trains in the timetable. Now they are running only 60% of the trains according to railway minister. They call them cloning express. Though they are the regular trains, they are not called by their name and number. They have simply removed the first number of the regular train, added 0 in its place and are calling them a special train. They are using the pandemic as an opportunity to run only profitably. As per the CAG recent report in 2019-20 the passenger loss is Rs 46000 cr It was cross subsidised from goods earning of Rs 45900 cr. As they expect part of goods train also will be privatised this will not be possible. Therefore, they are preparing for the virtual scenario of privatisation of goods and passenger trains. If private passenger trains have to run on the existing congested routes in the scenario of neglect of strengthening and expansion of rail network, not all the time tabled trains can run to give level playing field to the private operators. One of the conditions is that there should not be any Indian Railways train one hour before and after their trains, not even from another terminal. That is why they do not intend to operate all the passenger trains. Therefore, expectedly fuel expenditure will be far less than that of revised level of pandemic period.

They also do not intend to run suburban trains at the level of 2019-20 as the loss in this segment is Rs 6000 cr. They are not adding general compartments either. As per the NRP the Russian and British passenger segment losses are met by the respective governments, even though most of the British passenger segment is with private operators. There is a saying in Indian railways that as we increase the passenger service, so the loss will increase. As the government feels that the user pays, they fleece the reduced passengers to meet the loss. Extract the maximum from the minimum is the philosophy. They have abandoned the philosophy of social service obligation. In these special trains, fare is more and there are no concessions like senior citizen, patients, children, journalist, farmers etc. They are virtually preparing the railways ground for privatisation of goods and passenger trains.

Railway unions should unite the workers and go to people for bigger struggles along with the people to save railways and the nation.

R. Elangovan is the Vice President of the Dakshin Railway Employees Union

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