The lowering of the investment projects targets of the railways in the Eleventh Plan by 23% to Rs 2,00,802 crore, due to the fund deficit, is not surprising, given the irrational approach that the political leadership has taken on fares and PPP projects. This would push down the share of railways in the total investments in the Eleventh Plan by almost three percentage points to just 9.7%. The large subsidies on passenger fare and the high freight rates have derailed the earning projections. Thus, while the growth of passenger-km in the first three years of the Plan shot up by 9.9%, as against the targeted 5.9%, the growth in freight grew by just 6.6%, which was 2 percentage points below projections. This has raised the subsidy cost on passenger fares to an unbelievable high of Rs 19,000 crore, which no commercially run organisation can obviously afford. What is worse is that even the limited efforts to mobilise private investments through the PPP route have been largely unsuccessful, with only 16.5% of the original projections likely to be met by the end of the Plan.
This slackness is not surprising and it reflects the railways? continued focus on incremental changes and steady improvements, rather than on a radically new and ambitious approach?which is demanded in the current scenario, as pointed out in the railway vision document. The pricing problems and the hesitant approach to PPP projects have cramped the resource mobilisation efforts, forcing the railways to rely more on budget support from the government than what was originally envisaged. Most recent estimates show that the share of the central government in the railway investments will now go up from 77% to 91% while the share of the private sector will dip from 19% to just 4%. The most worrying development is the slow pace of PPP projects, which include the building of the three stations of Delhi, Mumbai and Kolkata to world-class standards, and setting up of manufacturing units at Madhepura, Marhowra and Kanchrapara. Currently, only 4 PPP projects costing Rs 4,717 crore are under implementation, while 50 railway stations costing Rs 90,000 are in the pipeline. And a significant change in mindset is essential as the requirements are substantially more than the normal levels, as the two dedicated freight corridors have also to be completed by 2016 and high-speed trains rolled out to keep in line with global benchmarks.
