Tuesday, 13 March, 2012

Expectations from the Railway Budget

Expectations from the Railway Budget
(Realistic Expectations & Wishful Thinking)

After a long while, we're going to have the budget excercise in March. Tomorrow, we'll have yet another "Trinamool" Railway Budget.

In this post, I plan to have two simple sections - Realistic Expectations & Wishful Thinking. Here goes:

Realistic Expectations

  • Announcement of new trains, especialy to / through West Bengal and election-bound states. Gujarat could be a googly.
  • Meaningless tinkering of passenger fares
  • Promises of extra allocation for Safety, only to be surely forgotten
  • Announcement of a few tokenistic reform measures (to please the "reform-oriented" PM for what it is worth)
  • Demand for an enormous amount of funds from the Finance Minister to actually execute the announcements made in the railway budget and to "make both ends meet"

Wishful Thinking


  • Introducing a three-tier system of passenger fares for second class passengers:
    • The least level of passenger fares (pegged at a level 10% - 20% below the current fares) - These fares will be applicable for all really poor "below poverty line" BPL card-holders (who will have to produce their BPL cards as proof of identity for travelling with these fares
    • A "middle-level" but-still-subsidised set of passenger fares (pegged at a level 10% - 20% above the current fares) - These fares will be applicable for all "Ration-Card-Holders" who have actually bought any items from the ration shop within the last 3 months preceding the date of booking of tickets - After all, anybody who buys anything at the ration shop is at best belonging to the "lower-middle-class" or truly cost conscious. They ought to be provided with a reasonable subsidy - perhaps for a few more years
    • A "cost-based" fare fixed on a "No-profit-no-loss" basis for all other passengers
  • Announce Privatisation of ALL air-conditioned compartments in all trains. These air-conditioned compartments can be sold on 3-5 year leases to the private operators on the basis of public auctions - "Uneconomic routes" can be bundled together with "attractive routes" while auctioning, so that the private operators are encouraged to cover the entire existing railway network across the country. The successful bidders would be expected to recover their investment by pricing their tickets in any manner they deem fit. The government will be free to introduce a maximum of 50% additional air-conditioned compartments in any route "on grounds of public interest". Rules pertaining to the minimum number of passengers to be accomodated in each air-conditioned compartment can be laid down prior to auctioning these additional air-conditioned compartments that are introduced on account of "public interest".


  • On a pilot basis, a maximum of 10 "Bullet Trains" travelling at a speed of "Not less than 300 KM per hour" to be run by private operators can be started. The railway tracks for this purpose will be created by the private operators who will get a long term lease of, say, 25 years to operate these routes. Based on opinions obtained from an expert panel, these routes can run parallel to existing tracks or underground or on elevated tracks well above the existing trains - Let me not attempt to guess what's optional - let the experts decide.
  • The passenger fares for these bullet trains will be completely market-determined with no intervention from the government. The private operators will be at liberty to create any innovative revenue streams. They will be free to determine the frequency of trains.


  • The Primary Railway Stations at all state capitals can be let out on long-term lease of not less than 25 years on the basis of a "Build, Operate, Transfer" model. The existing space that is presently being utilised for railway stations can be used by the private operator, with the right to create enormous high-rise buildings which may be used by the private operator for any legal commercial / residential purposes - with the clear understanding that it will be for a period of the long-term lease. Whether he'll have retail malls or offices or theatres or residences will be the choice of the operator.
  • User Charges for the railway stations (like platform tickets, parking fees, etc.) will be fixed at pre-determined levels which will be part of the terms of the agreement between the private operator and the government.
  • Each Railway Station operator will be identified through a two-step global tender - First step will be to identify competent players based on financial clout, commitment for user charges, technical knowhow on handling such large-scale projects, etc. The top 5-7 players thus identified for each station will be asked to participate in the second stage of the tender through a public auction.


  • 400 Railway stations will be identified across the entire country which will form 400 "CENTRAL STATIONS" of the future.
  • A "Group of Statesmen" including the Railway Minister, Finance Minister, Urban Development Minister, Leader of the Opposition, a representative of each Chief Minister will be appointed to study the proposal and come up with a plan of action within 90 days.
  • They will identify a suitable method by which the entire land area sorrounding each of these 400 stations (within a radius of x kms from the station) will be declared to be "Model Urban Centres". The existing land-owners will be allowed to either continue their present activities or will be encouraged to start any business activity of their choice. Meaningful tax incentives will be created for this purpose. Both at the individual level and for corporates.
  • Business leaders will be encouraged to "Adopt" each of these "Model Urban Centres" through a similar basket of incentives
  • Any new school, college, hospital, theatre, etc. that comes up in any of these 400 "Model Urban Centres" will be offered a similar basket of incentives
  • All these incentives will be directly linked to fresh investments in these 400 "Model Urban Centres", and will be subject to independent audit
  • The Railways already own vast tracts of land in different parts of the country, and probably in these 400 "Model Urban Centres" as well. The railways will identified actual gaps in investment in each of these "Model Urban Centres" and lease their land parcels to fill such gaps. For instance, if a particular "Model Urban Centre" does not receive a proposal to start a high quality primary healthcare centre, the Railways will create one using their "sphere of influence".

I'm intentionally not going into other "specifics" which are part of the usual suspects of any Railway Budget.

If, however, any Railway Minister who actually follows all the above suggestions, chances are bright that he and his party will reap extremely rich electoral harvests. And, if I may add, the Railway Minister will, in due course of time, go on to become our Prime Minister in the years ahead. Just like Manmohan Singh built on his successful stint as the Finance Minister who brought back India from the brink to go on and become the Prime Minister of India.

I've consciously titled this portion as "Wishful Thinking". If wishes were horses, this one ought to fly!



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1 comment:

Rahul said...

proposals (technology advancement-more rail bridges and so on and security system improvements) looks nice, but it should be completed timely and well maintained

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