Dec 23, 2016

Indian Railways mulls ‘go slow’ approach on new infrastructure



After pumping in Rs 12,000 crore to build new lines this year, Indian Railways is advocating a “go slow” approach on the infrastructure creation drive. (AFP File Photo)

After pumping in Rs 12,000 crore to build new lines this year, Indian Railways is advocating a “go slow” approach on the infrastructure creation drive.
Coupled with mounting losses in passenger earnings (estimated at Rs 33,000 crore this year) and the Pay Commission commitments placed at Rs 32,000 crore, railways minister Suresh Prabhu’s high-pitched drive to build new lines has compounded the financial woes of the state-owned transporter.

The transporter’s Operating Ratio (OR) – paisa spent against every rupee earned – has crossed the 100% mark for the first time in several decades and is currently placed at an alarming 130%.

“More new lines mean bigger financial losses, as a majority of tracks being funded have a low or even a negative Rate of Return,” official documents show.

Against the average allocation of approximately Rs 5,000 crore during the regime of UPA-II, the NDA government sanctioned three times more funds to build new lines in the budget of 2016-17. During the previous year, seven new line projects for building 456 km of tracks at a cost of Rs 9,881 crore were completed.

“Infrastructure creation is a splendid idea, but this ought to have been preceded by an exercise at classifying the high-priority lines from the rest. As this was not done, funds have been uniformly allocated to 80% of ongoing and pending projects. As these lines have a negative RoR, rail finances are likely to slump down even further this year”, an official said.

RoR calculations indicate annual percentages of profit or loss as against the funds invested in constructing the track.

Among projects being financed includes the 55.1 km Etawah-Mainpuri line sanctioned in 1997-98 (RoR of -27%) and the 30 km Hansidiha-Godda line sanctioned in 2011-12, which has a RoR of -38%.

“It is fine to build new lines with low RoR, as the Railways have a social commitment and cannot be run as a commercial organisation. But the NDA government has been committing a series of other blunders. Because of their arrogance, they have made a mess of the Railways and shaken up its foundations”, former railways minister Dinesh Trivedi told HT.

“Building new lines to decongest the network is a critical necessity. But some discretion to prioritise and differentiate the low priority projects from the others should be exercised”, said Vinayak Chatterjee of Feedback Infra.
Source - Hindustan Times

 

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