Why Indian Railways is incurring losses under Mamata

'Mamata magic' might have turned the tide in favour of Trinamool Congress in West Bengal in the last Lok Sabha elections, but things don't look hunky dory in the firebrand railway minister's office this year.

If the current revenue figures are any yardstick to go by, the Railways could just about miss their target for the present fiscal ahead of the Rail Budget which is less than four weeks away.

The Railways have earned Rs 44,789.55 crore (Rs 447.895 billion) as revenue from commodity-wise freight traffic during April-December 2010 as compared to Rs 42,146.97 crore (Rs 421.469 billion) during the corresponding period last year, registering an increase of 6.27 per cent.

If the total earnings are taken into account, including earnings from the coaching department, the total earnings stands at Rs 67,880.82 crore (Rs 678.808 billion), as against railways projected target of Rs 94,765 crore (Rs 947.65 billion) for the entire fiscal.

Officials fear that with just two-and-a-half months remaining for the financial year to conclude, the railways would be hard pressed to meet the target.

To add to the woes, Railways have put on hold all public private partnership projects, including proposed plants at Kanchrapara in West Bengal and Madhepura and Marhora in Bihar.

Railways have to commit approximately Rs 8,000 crore (Rs 80 billion) per annum for these three projects -- an electric multiple unit/coach factory at Kanchrapara, diesel locomotive factory at Marhora and electric locomotive plant at Madhepura -- for assured purchase orders.

So what went wrong in the ministry of railways? Has Railway Minister Mamata Banerjee been impulsive? Or has she made some cardinal mistakes in her calculations?

Here are some reasons that experts believe threw the Railways' growth off track.

Click NEXT to read the versions of railway sources, officials, columnists and the aam aadmi.

Those managing the Railways' finances, and currently engaged in preparing the forthcoming Rail Budget, have enough reasons to worry about.

Rail Bhavan insiders say that the Railways now has a net deficit of about Rs 2,500 crore (Rs 25 billion).

The Railways' operating ratio (the sum of money spent to earn a sum of Rs 100) is the best indicator of its financial health.

In 2001-02, the operating ratio reached an alarmingly high 96 per cent. The Railways, however, managed to bring it down to 75.9 per cent in 2007-08.

But in 2008-09, it again deteriorated to 90.5 per cent, and then slipped further to 94.7 in 2009-10.

This year, the operating ratio is threatening to rise well beyond 94 per cent, sources add.

Officials point out that the finances took a Rs 1,000-crore (Rs 10 billion) hit because of the two hikes in diesel prices this fiscal, while the 2 per cent hike in dearness allowance and the increase in number of days for the performance-linked bonus raised their expenditure by about Rs 400 crore (Rs 4 billion).

However, the real shock came in the form of freight business, which dropped almost by Rs 700 crore (Rs 7 billion).

. . .

As early as in March 2010, the then financial commissioner Sowmya Raghavan had raised the red flag.

At a gathering of all the general managers of the Indian Railways, Raghavan had said: "If the trend of spending more and earning less continues, not only the internal generation of funds suffers but there is a very serious threat of Railways defaulting on the dividend payment liability, which all of us would like collectively to avoid and not find ourselves in."

"We have already scraped the bottom of the barrel and the fund balances have all been utilised. So there are no savings to meet shortfall in internal generation targets," he added.

Raghavan had also stated that 'in the final analysis, the performance of the organisation would be just at the bottom line' and that 'unless we are in a position to control the expenditure and increase the earnings on a sustained basis, survival for the organisation becomes a very difficult proposition'.

Needless to say, Raghavan's warnings were not heeded to. Moreover, Banerjee's prolonged absence from Rail Bhavan meant piled up files and more problems.

An important decision relating to the filling of some 90,000 safety-related posts kept getting postponed. Vacancies for the posts of gangmen, pointsmen, signalmen and assistant station masters are also in the way of smooth running of safety systems.

Also, if Banerjee is absent for days and weeks, it hampers supervision and in turn the performance of the ministry as a whole, says Railway insiders.

. . .

In a recent column in India Today, Bhavna Vij-Aurora wrote, 'Indian Railways is on the brink of bankruptcy and that the ministry has asked the government to double its budgetary support to Rs 39,600 crore (Rs 396 billion). The finance ministry has responded by saying, 'Railways need to have a certain discipline.'

According to the columnist, Railway Minister Mamata Banerjee can't blame anybody but herself for putting the organisation in the red. Under her stewardship, Indian Railways has registered a sharp decline in earnings and a steep rise in expenditure.

She promised 1,000 km of new lines every year but has not been able to deliver even 10 per cent of that.

Expenditures have gone up by Rs 1,330 crore (Rs 13.3 billion) and earnings are down by Rs 1,142 crore (Rs 11.42 billion), taking the net deficit to Rs 2,500 crore (Rs 25 billion).

And this is not all.

The columnist went on to add that Prime Minister Manmohan Singh, Finance Minister Pranab Mukherjee and Planning Commission Vice Chairman Montek Singh Ahluwalia are a worried lot as Banerjee takes no advice.

At a meeting with the prime minister and finance minister earlier this month, she asked them not to insist on a fare hike.

Poised to present what she hopes will be her last Railway Budget, she has asked for a free hand, the India Today columnist added.

Banerjee knows it is also her last chance to woo the electorate in West Bengal. So it is going to be another bout of populism: more new lines and trains for her home state.

By this the columnist means more pressure on the Railways' coffers.

. . .

Enthusiasm is welcome but too much of it often does more harm than good.

In her profound eagerness to topple the present ruling government of West Bengal, Mamata Banerjee went on 'inaugurating' trains after trains without really paying any heed to infrastructure.

As a result, the Railways grew like a baby with an oversized head and weak limbs and torso. As a lay person, I felt the ministry severely lacked discipline and all the steps were taken rather impulsively.

The suburban railway service in West Bengal has deteriorated like nobody's business and the daily commuters are having a harrowing time.

More often than not, the Metro Rail in Kolkata malfunctions throwing the city traffic out of gear. With due respect to the railway minister, I appeal to her to spend more time in Delhi and to focus on her portfolio rather than concentrating on the political affairs in her home town.

After all, Railways is the lifeline of the country and it's time she brought in some improvement. She must take some radical steps in this Rail Budget so that the losses are minimised and services improved.

Biswanath Das
Marketing Executive

I dread to travel by the train these days. They are overcrowded like mad and are rarely running on time. As for long-distance ones, they are often attacked by dacoits or insurgents. It's a sad state of affairs.

Our Railway Minister Mamata Banerjee has been extremely generous to our state of West Bengal. She has showered hundreds of trains on us. But, sadly, she never paid any attention towards improving the infrastructure.

As a result, there are new trains galore but no good network for their smooth running. As a result, popularity of the railways is going downhill.

I often read in newspapers that the railways has been incurring losses ever since Mamata Banerjee took over the reins. I fail to understand why she does not take the advice of her senior colleague -- Finance Minister Pranab Mukherjee -- to counter the loss?

Isn't it a Cabinet minister's duty to address such issues and look for a solution? Banerjee should not forget that she is handling a huge and important portfolio and there can be no excuse for any slip-up whatsoever.

The people of this country have entrusted her with a mammoth task and she has no right to take it lightly.

. . .

Debasish Mukherjee
Businessman

I have great faith in Mamata Banerjee's capabilities.  She has really worked her way up in politics.

After struggling hard at the grassroots level, she has carved out a place for herself and her political party. And now that she is handling the railway ministry, I do believe she would do great things for her ministry despite the obstacles.

Banerjee's efforts to improve the Metro Rail network of Kolkata is commendable and it has gone a long way in bettering the traffic system of the city. However, media reports indicate that the Railways have been incurring huge losses under her tenure.

It's time Banerjee pulled up her socks and did something. She must take into confidence her senior colleagues and railway executives and must come up with a plan.

She has achieved many an impossible thing in the past and minimising the Railways' loss just can't be too difficult a task for her.

All that she needs at the moment -- a good roadmap, an effective planning and loads of moral support.

It's she who has instilled hope for change in the minds of the people of Bengal. Therefore, I see no reason why she would not be able to turn the Railways around.

. . .

Swapan Mondal
State bus driver

I often overhear my passengers discussing that Mamata Banerjee has undone all the good that former Railway Minister Lalu Prasad Yadav had done for the Railways.

I am a small person, haven't studied much. Neither do I understand poilitics. However, I do understand profit and loss and their implications.

Commuters these days often talk about Banerjee's 'mindlessness' and 'lack of discipline'. They draw instances of her launching one train after another in West Bengal. As a resident of this state, I don't mind this particular step of hers at all.

However, I do mind that if by doing this, she is throwing the Rail Budget's balance ratio out of the window. She can't afford to do that. After all, she is a public servant and she has no right whatsoever to disappoint the people who elected her to power.

If the Railways are incurring losses, she would have to explain her reasons to us -- the people of India. And if her reasons are not satisfactory, the people would decide what would be her fate.

. . .

Sujata Sutar
Vegetable vendor

I am an illiterate person. I make my living out of selling vegetables.

I was quite thrilled when Mamata-didi launched special monthly tickets for us at concessional rates. I could now save some money for my family, I had though then.

Little did I know, what was in store. It's too much of a struggle to get the eligibility form for concession signed by the authorised personnel. People like us do not have easy access to political honchos and we can at the most approach their personal assistants.

The latter make our lives miserable by not doing what they are supposed to do. I heard that some had to cough up a 'bribe' to have their fare concession application form signed by the authorities.

I am a small person and I don't know if I have the right to ask -- when Mamata-didi launched such an innovative scheme, why didn't she take effective steps to counter bureaucratic nonsense?

She, I heard, is thourougly pro-people. Then why has she turned a deaf ear to our problems?

Also, in the northern and southern suburbs of Bengal, trains are crowded beyond description. And there's a sea of people all the time. Shall we be getting more trains, dear didi?

. . .

Bapi Halder
Pan shop owner

I can't thank you enough for letting me speak here. I commute by train daily from my suburban home to this shop. I spend about 3-4 hours daily in the train.

To my utter dismay, I overhear people bragging about travelling without a ticket.

There is hardly any monitoring at the stations and I think at least 25 to 30 per cent of the total passengers in Bengal availing of the local trains travel without a ticket.

Now, this is a serious issue.

Just at a time when everyone is flaying Mamata Banerjee for not doing enough to bring down the Railways' losses, I would like to draw her attention to this issue.

Banerjee must take immediate steps to counter this problem.

Apart from stopping the ill of ticketless travel, the measures would also made some substantial additions to the Railways' coffers.

Therefore, at a time when her detractors are crying themselves hoarse over her 'mismanagement', a few simple steps could help her redeem her 'lost glory'.

Banerjee, I heard, hates corruption. Therefore, she has got to stop the nuisance called ticketless travel.