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In 2013, the Indian Railways is building the world's tallest rail bridge in Jammu and Kashmir. Yet it struggles to perform the most mundane tasks, such as keeping platforms clean. Its capacity to build the infrastructure that India needs is consistently shortchanged by its inability to run a financially disciplined organisation, primarily because of political compulsions. Railway Minister Pawan Kumar Bansal had an opportunity on Tuesday to initiate a break from this dismal pattern. The minister's speech appeared to touch upon all the right ideas, but it fell short of a plan.
To his credit, the minister correctly resisted the temptation to announce a raft of projects that would only further cripple the railways. Instead, he concentrated on steps to shore up the financial strength of the organisation. He charted a growth rate of 14 per cent for total traffic receipts. Minus inflation, it means a real expected growth rate of 7 per cent, about one per cent more than the pace at which the economy might grow in 2013-14. He projected close to 9 per cent growth in revenue terms for freight traffic and about 30 per cent for passenger traffic. While these are ambitious numbers, the minister may have reason to be optimistic. The rise in both streams includes the impact of the revision in passenger fares announced in January and now a fuel adjustment component for goods traffic. He also noted that an annual rise in passenger fares of about 5-6 per cent for the next 10 years is essential to keep the railways in the black. That, despite the rise, the allocation for the two capital and development funds that finance fresh investment is meagre, shows the perilous nature of railway finances. The plan to focus on just 347 projects and the proposal to set up a Debt Service Fund, are steps towards financial consolidation.