THE RIDDLE THAT INDIAN RAILWAY IS
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    • THE RIDDLE THAT INDIAN RAILWAY IS
    The Rail mantri Sri Suresh Prabhu is a chartered Accountant by training and a man rated highly for his integrity. Added to this he is a GSB( Gowda Sarasvat Brahmin- the ilks of Shenoys, Prabus who built Canara Bank from scratches) Much was expected of him when he was asked to take reins in Rail mantralaya a post held by Sadananda Gowda. He brought about a budget which spoke of huge resources crunch in the operations of Railways reportedly ferrying 2 trillion people daily all over India. He did not raise passenger fares, he did not increase any allocation for pending projects nor did he announce new trains, new projects for obvious resources crunch. He spoke of raising resources more than thru Budgetory resources. FDI is an option but given the state of affairs not many will be willing to invest. He left this to the imagination of those who read his budget as to how is he going to raise resources, an enormous task without market borrowings which have a cost the debt servicing of which is beyond his ministry's capacity to pay. Later on he claimed to have sealed an agreement with LIC, the PSU insurer to invest over a period 5 years as loans in tranches for one trillion which will be having an interest and repayment morotorium for 5 years. 

     

    LIC usually invests in many government securities and also in stock market operations. Last time when ONGC issue was short subscribed LIC stepped in to pick up the stake sale to save the issue. But ONGC is a profit making enterprise and paying 100% dividends. LIC could recoup its investment in one year. People then criticised the then FM.  Now LIC is asked to lend to Railway an enormous one trillion out of its investible surplus with interest holiday for 5 years. 

    Rail Mantri could have attempted to downsize railway be segregating into various zonal rail corporations with Indian Railway being a holding company. We will get to valuation for the assets held by railways. DMRC, Konkan railways are examples of corporatised rail transport which are running on profits. Dynamic pricing models, Tatkal sewa, increasing ad revenues of IRCTC, are some other methods thru which income could be raised.  There is no concrete proposal as to how the minister intends to generate internal resources over a period of 5 years to service the new debt and also to repay. these funds are supposed to be utilised for modernising railways,introduction of bullet trains in selected corridors. Even if Freight corridors become operational, the revenue boom could be staggering. 

    Deft bridging of books do not reflect reality. passenger ameneties like Wi-fi, surfing should have a cost and not offered free for those who avail them are not BPL families. Much was expected of Prabhu but he floored the chance to reform Railway purchases need to be watched for it is believed to be a cess pool of corruption. Pilferages in loads are also a concern. 
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