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Indian Railways – Desperate times ahead?

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The Indian railways have been the heart and soul of the country since the time they were built. Though they were built for the British to transport their goods and services, over time they started serving the purpose pretty well for us Indians too. But as is our wont, with a few changes here and there, the railways have functioned almost in a similar manner for decades. The same creaking infrastructure at platforms and stations, the same poor ticketing facilities, bad food services and the same trains, railways have been plagued with problems for as long as one can remember.

Indian Railways

Before Lalu had become the minister quite a while back, the railways were running mounting losses for years. During his reign, with a combination of good business acumen and a lot of wit and guile to change the accounting rules and standards, Lalu became the darling of the masses. Infact, Lalu’s reign became a case study and students from across the world from ISB to Stanford to Harvard came to listen to him. The railways were making money and Lalu had really become the king of good times.

In 2008, 25000 cr was the surplus for the railways and over next three years it ballooned to more than Rs 55,000 cr with Mamata Banerjee aka didi at the helm. But now things have taken a U turn – Railways has gone into Red. So, what has driven the railways to this abyss? How come after going up for some many years are the railways back in the red?

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The fuel costs have gone up quite a bit. Special rules which prevent private container freight operators to carry more freight are causing a lot of problems as they have decreased their investment by more than Rs 2000 cr. The freight loading target has fallen way off as compared to couple of years back. The modernisation of railway stations and trains has not happened as promised (with probably an exception of Bengal) because Didi has been too busy playing politics than take care of such an important ministry.

The problems are so many that the Dedicated Freight Corridor which is expected to cost around Rs 77,000 cr and was commissioned in 2005 to be completed in 2012 has not even started as yet. First there were problems with land acquisition – Now when those problems are sorted out, there are problems because the railways have no money to build it. Their operating ratio (the amount of money spent to earnings) has gone from Rs 100 upto about Rs 115.

It would be interesting to watch what didi brings on table for this Railway Budget and how does she plan to bring back Railways in green. Are we looking at yet another Air India like situation?

What is your take?

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