Railway Minister Suresh Prabhu presents Rail Budget 2015

On February 26th 2015, the Railway Minister, Suresh Prabhu presented the Rail Budget for 2015-16.

In the budget there were very grandiose goals set forth namely,

  1. To deliver a sustained and measurable improvement in customer experience.
  2. To make Rail a safer means of travel.
  3. To expand Bhartiya Rail’s capacity substantially and modernise infrastructure.: increase daily passenger carrying capacity from 21million to 30 million: increase track length by 20% from 1,14,000 km to 1,38,000 km: grow our annual freight carrying capacity from 1 billion to 1.5 billion tonnes.
  4. Finally, to make Bhartiya Rail financially self-sustainable. Generate large surpluses from operations not only to service the debt needed to fund our capacity expansion, but also to invest on an on-going basis to replace our depreciating assets.

To achieve these goals, the Railway Minister presented a plan which involved spending Rs 8,56,020 crores over the next five years.  This plan is completely in line with both the previous Congress governments, as well as the current Narendre Modi led government’s policies of increasing reliance on FDI as well as private sector participation.

In the budget presented by Mr. Prabhu, there are no details of how such a large sum of Rs 8,56,020 crores would be raised. There are no timelines for when specific targets have to be met. The entire budget presentation is on the same lines, with a lot of mission statements with no details. It is very clear that this is deliberately done to hide the real purpose of Government which is aiming for a major restructuring of the Indian Railways.  The government does not wish to divulge the details to the public as there would be widespread opposition by the workers of Indian Railways as well as the rest of the working population.

Notwithstanding the stated goals in the Minister’s budget speech, the thrust of the initiatives proposed by him is not in the direction of making the travel of millions of working people of India safer and more comfortable. Neither is it in improving the working and living conditions of the 13 lakh strong workforce of the Indian Railways.

For example though the first of the stated goals of the Budget is to” deliver a sustained and measurable improvement in customer experience”, there is only an allocation of 1.4% of the total amount for providing for better passenger amenities!

Similarly it is stated that “We will take up the work of repair of staff quarters and also of RPF barracks. We will also improve the delivery of health services to our employees. For the recreational pursuit of our staff we have decided to upgrade four Holiday Homes, to begin with”. It is well known that the staff quarters of the railway Class Iii and IV workers are in a very poor condition.  However the Minister has not stated how much money will be allocated for the work of repairs as well as building new quarters! Instead to improve the recreational pursuit of the staff, four holiday homes will be upgraded! For a 13 lakh strong workforce, upgrading 4 holiday homes shows very clearly the concern of the Minister for the welfare of the workers!

The All India Loco Running Staff Association has been repeatedly raising the issue that loco pilots (engine drivers) have to work very long hours without any rest which puts passenger safety at risk. The AILRSA has also pointed out that contracting out skilled work like checking of tracks, to untrained temporary workers, increases the vulnerability of passengers to accidents.  It is clear that when the Railway Minister ignores these crucial issues, “making rail travel safer” is just a policy objective.

Further while the next stated goal is to increase the “Rail Capacity” substantially, the Railway Minister then claims that this will be done only along the already congested routes connecting the 4 metros of Delhi, Calcutta, Chennai and Mumbai. While this occupies only 16% of the total rail network, it carried more than 50% of the rail traffic. The railway minister now proposes to double, triple and quadruple the lines in these sections as the means to increase the rail capacity. This is done with a purpose of “maximum returns with a minimum of investment”. This is a typical profit centric method of investment which is totally in conflict with the needs of the Indian people as a whole.

After Independence, the Route length of the Indian Railways stood at 54,000 kms, while today it is at 65,000 Kms , with the addition of only 10,000 kms of new routes. However the track length has increased to 1,15,000 Kms, by laying additional tracks along  the existing routes. It is along this same path that the Railway Minister is proposing further development. Major portions of our country still do not have rail connectivity. Providing rail connectivity to the hinterland regions promotes development, and would help to prevent the overcrowding of the metro cities which is currently taking place. This investment though capital intensive will not yield high returns in the short term but in the long term they are advantageous for the masses of people who migrate thousands of miles from their homes in search of livelihood.

The last stated goal of the Railway Minister, is to “make Bharatiya Rail financially self sustainable”. The Minister proposed raising the required amount of Rs 8,56,020 crores through “setting up an infrastructure fund, a holding company and a JV with an existing NBFC of a PSU with IRFC, for raising long term debt from domestic as well as overseas sources, including multilateral and bilateral financial institutions.“  This indicates that a holding company whose shares would be privately traded to raise funds is being thought of. Also it is declared that funds from “overseas sources” as well as “multilateral and financial institutions” would be tapped. But it goes without saying that none of these sources would lend money without assured returns. Combined with the Ministers Goal of self sustaining finances from Bharatiya Rail ,this means that entire operations of Indian Railways would be converted to a profit making enterprise able to give assured returns to all the investors and lenders, whether Indian or overseas. 

In a people-centric society, where the economy would be oriented to fulfilling the needs of the working population and masses of people, railways would be viewed as a social investment by the State. In such an economy, the railways will be developed to meet the travel requirements of people and for the transportation of essential goods and raw materials for industry. However, it is clear from the budget objectives and the policy measures spelt out by the Minister, that the railways like many other social enterprises is viewed from the capital-centric perspective of maximizing profits for private capital.

To speed up the privatization of the Railways, successive governments and railway ministers have handed over larger and larger areas of operations to private capitalists. This includes station housekeeping, catering, track and wagon maintenance etc. These are low capital and more labour intensive operations, where it is easy to get private participation.

A Private Freight terminals Policy was issued in 2010 to encourage private participation in building and maintaining private freight terminals. This requires more capital investment and delayed returns; hence it has not attracted private capital as per plan. The policy was revised and a fresh policy was issued in 2012. Still there was no interest. Now, the present Railway Minister has assured the bourgeoisie in his budget that yet another new policy giving even more incentives will be put in place; for example, giving Railway land at a nominal license fee to start operation!

To further privatise the operations of the railways through the Foreign Direct Investment (FDI) route,   the Railway Minister has now given the go ahead to build two diesel and electric locomotive plants in Bihar with FDI, at a total cost of Rs 2400 crores. The electric locomotive plant will be built at Madhepura and the Diesel Locomotive plant at Marhora.  Global monopolies such as GE, Alstom, Siemens, Bombardier and EMD are bidding for these projects. With the government allowing 100% FDI in Railways, it is proposed that in future all diesel and electric locomotive requirements of the Indian Railways will be met from these  plants using imported technology, displacing the indigenously build  locomotives the Railways was using till now. It is to be noted that many revisions of the initial proposal had to be made to make it “attractive” for these monopolies to invest in India.  Similarly it is expected that even more concessions will be demanded and given to these companies to make it profitable for them to invest in India. Amendment of the labour laws in India has been a consistent demand of capitalists and this is also what the Modi government is carrying out.

MEL call on the workers of the Indian Railways as well as all the working people to unitedly oppose these moves at privatization of the Indian Railways, unite in defence of the demands of railway workers and for those measures that will in fact improve the space for increasing rail safety .


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Defeat Privatisation    Railway Budget    Mar 16-31 2015    Political-Economy    Rights     Economy    


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