Railway Budget 2013-14: Passengers Fare Untouched, Hike in Freight Tariff

Railway Minister Pawan Kumar Bansal presented the Railway Budget for 2013-14 in the Parliament on February 26. The Budget spared passengers a fare hike, but raised various charges on tickets as well as freight tariff to net in additional Rs 4,683 crore a year.

Plan Outlay

The railway minister announced the highest-ever plan outlay of Rs 63,363 crore for the public sector behemoth. Of this, Rs 14,260 crore would be raised from internal resources with Rs 26,000 crore budgetary support. Other sources of financing include Rs.14,260 crore from railway's internal resources and Rs.2,000 crore from railway's share in road safety fund. There is also a plan to raise Rs.15,103 crore from the market and mobilize Rs.6,000 crore through Public-Private-Partnership (PPP) route to fund its expansion plans in 2013-14.

While tatkal charges for sleeper class have been raised by Rs 15 to Rs 25 and for AC chair car from Rs 25 to Rs 50, tatkal charges in AC-3 tier have been increased by Rs 50 and AC-2 tier and executive class by Rs 100. The reservation fee for AC First and Executive classes has been raised to Rs 60 from Rs 35 and that of First Class and AC-2 doubled to Rs 50. Reservation fee for AC chair car, AC-3 economy and AC-3 tier has been increased to Rs 40 from Rs 25 and supplementary charges for superfast trains raised between Rs 5 and Rs 25.

Growth Rate

It is creditable that an operating ratio of 88.8 per cent is being achieved during the current year 2012-13, even after fully repaying the loan of Rs 3,000 crore along with interest that was taken from the Ministry of Finance, and after setting aside Rs. 9500 crore for Depreciation Reserve Fund (DRF). Against this, the budget estimate for 2013-14 projects an Operating Ratio (OR) of 87.8 per cent with a DRF appropriation of only Rs.7500 crore. This once again highlights the need for a more reliable index of financial performance rather than the present OR, which can be tweaked to suit by appropriately adjusting the DRF allocation. It is hoped that the proposed revamping of the accounting system will look into this aspect.

The Gross Budgetary Support (GBS) component out of this was projected as Rs. 2.5 lakh crore. It is rather distressing to note that the 12th Five-Year Plan approved by the Planning Commission has scaled down the Railway plan to Rs. 5.19 lakh crore with a GBS component of Rs. 1.94 lakh crore.

In other words, the government is not in a position to provide for a much higher rate of growth of the railway sector than it has historically done. The long-term implication of this modest growth rate on the economy as a whole needs to be looked into.

Highlights

* No increase in passenger fares

* Rs.6,600 crore increase in earnings from fare adjustment in January

* Rs.63,000 crore investment in 2013-14

* 1,047 million tons freight loading estimated during 2013-14

* Passenger earnings of Rs 42,000 crore estimated in 2013-14

* Indian Railways Institute of Financial Management to be set up at Secunderabad

* Chair at Delhi to promote research in reducing carbon footprint

* 22 new lines to be taken up in 2013-14

* Superfast and Tatkal charges to rise

* 67 new Express trains to be introduced

* 27 new passenger trains; run of 58 trains to be extended

* New debt service fund to be set up

* Six more Rail Neer bottling plants to be set up

* Losses mounted from Rs.22,500 crore in 2011-12 to Rs.24,600 crore in 2012-13

* Planning Commission pegged 12th Five-Year Plan at Rs.125.19 lakh crore

* Fall in accidents - per million accidents down from .41 to .13

* Aim to eliminate 31,846 level crossings

* Will close fiscal 2012-13 with fund balance against previous deficit; need to build fund balance to Rs.30,000 crore by end of 12th Five-Year Plan

* Operating ratio of 88.8 percent achieved

* Dividend reduced from 5 to 4 percent

* Electrification of 1,200 km to be completed this year

* 72 additional suburban services in Mumbai and 18 in Kolkata

* Complementary passes of freedom fighters to be renewed every three years instead of annually

* New wheel factory to be set up at Rae Bareli

* Greenfield EMU manufacturing facility at Bhilwara

* Railway energy management company to be set up to harness solar and wind energy

* 1,000 crossings to be energized by solar power

* 1.51 lakh vacancies to be filled up

* Locomotive cabs to be air-conditioned

* Azadi Express to be introduced to travel to places associated with freedom struggle

* India in 1 billion ton freight club

* By end of 2013-14, 1,500 km of contracts to be awarded for two dedicated rail corridors

* Rs.1 lakh crore target set for public-private-partnership route

* Free Wi-Fi to be provided on some trains

* Rs.100 crore for improving stations in New Delhi

* 179 escalators and 400 lifts at A 1 and other select stations

* E-ticketing through mobile phones

* SMS alerts for passengers on reservation status

* Next generation e-ticketing system by end of 2013

Assessment

The 2013-14 Budget has skirted the prickly issue of structural reforms. There is no mention in the budget of even the proposal in the last budget to expand the Board to include two members to look after PPP /Marketing and safety/research. The proposal has perhaps been shelved.

Overall, the budget conveys an impression of an exercise to keep the system going very much as it has done in the past, at a modest growth rate. Whether such a rate of growth of this key infrastructure sector will be sufficient to sustain the projected growth rates of the economy as a whole remains to be seen.

Nevertheless, it is a matter of pride that the Indian Railways has joined the select club of world railways moving more than a billion tons of freight annually, and is entering into yet another exclusive group of railways moving more than 10,000 tons per train. Some concomitant steps that should improve maintainability, reduce maintenance costs and improve staff productivity such as widespread introduction of track friendly/self-steering bogies and doing away with the anachronistic institution of goods guards, have not been explicitly mentioned in the budget. Hopefully, these and other steps will be implemented.

Assembly Elections in Gujarat and Himachal Pradesh: Hat-Trick for Modi, Congress Returns to Power in Shimla

Gujarat Chief Minister Narendra Modi has led the Bharatiya Janata Party (BJP) to a third consecutive win in the state Assembly elections. The resounding victory of the BJP in the Gujarat Assembly election is an endorsement by the people of the politics of development and a rejection of the politics of hate. Modi has recorded a personal achievement by leading the BJP to a third straight victory in the just-held Assembly polls. There are very few examples of this nature in the country.

BJP captured 115 seats in the 182-member House, short by two seats from his 2007 performance of 117 seats. Surprisingly, the state presidents of both the Congress and the BJP were defeated.

While it was a hat-trick for Modi, a record by any chief minister in the state so far, for the BJP it was the fifth straight win since 1995. The Congress which again failed to dislodge the BJP, ended with 61 seats along with its ally, the Nationalist Congress Party, two better than 59 it won in the last elections.

The Gujarat Parivartan Party floated by former Chief Minister Keshubhai Patel with the support of the disgruntled elements of the BJP to show Modi the “exit door,” ended up a cropper with only two seats, with Patel winning from Visavadar in Junagadh district in the Saurashtra region. Four seats went to Independents and others. In a tactical move, soon after the results were declared, Modi called on Patel at his Gandhinagar residence and sought blessing of the 84-year-old erstwhile stalwart of the BJP.

Modi retained his Maninagar seat in Ahmedabad city by a comfortable margin of over 86,000 votes, though a few hundred less than last time, while the Congress suffered serious setbacks with its state unit president Arjun Modhvadia and Leader of the Opposition in the outgoing state Assembly, Shaktisingh Gohil, losing the elections.

Keeping Gujarat’s results in view, one issue that will be hotly debated in the days to come is: Will Modi be the BJP’s prime ministerial candidate in 2014? The decisive win has certainly strengthened his case, though he himself is silent about it and the BJP too refuses to squarely face the issue.

As for the Congress, since Madhavsinh Solanki’s 148-seat victory in 1985, the party has not been returned to power in Gujarat. So disappointment, if any, was expected. The Congress has been saved from utter humiliation by a surprise win in Himachal Pradesh, where opinion polls had predicted a close contest. The drubbing it had got in the Uttar Pradesh and Punjab assembly elections had so unnerved the national leadership that it did not risk testing a new, younger leader in Himachal and chose to rely on the old warhorse, Virbhadra Singh, to lead the battle.

The fact that the BJP has not just secured an impressive victory but even won a record number of Assembly constituencies in Gujarat that have a high Muslim population, should silence critics of Modi who have been claiming that he does not enjoy the support and confidence of the minority community post-2002 violence. Of the nine Assembly seats which have a Muslim population of more than 25 per cent, the BJP has won seven. These wins have come with a vote share ranging from 45 per cent to 59 per cent. The constituencies include Bapunagar with a relatively low 28 per cent Muslim population and Jamalpur-Khadia which has a high of 60 per cent of the minorities.

Although the Congress, scared as it was after the 2007 experience, did not once raise the issue of the 2002 violence or the ‘persecution' of the minorities by the Modi-led Government, the fact remains that its workers had continued to spread venom against the chief minister throughout the election campaign at the grassroots level. But the results seem to suggest that even that strategy of the Congress has failed. The BJP has managed to make significant inroads into the minority votes as well, and which clearly indicates that the Muslims of the State are by and large disgusted by the hate propaganda unleashed by Modi's critics. They are willing to leave the past behind and move forward.

Himachal Pradesh

In Himachal Pradesh, where the polls were held along with Gujarat, the Congress Party has registered an impressive victory, displacing the ruling BJP although Modi, a Hindutva mascot these days, was the star campaigner sent in precisely to rally the faithful and convert the undecided. The Congress bounced back to power in the hill state winning 36 out of the total 68 seats, while the ruling BJP had to contend with 26. As expected, the Independents put up a good show to bag five seats. The BJP breakaway group Himachal Lokhit Party, which had floated the Third Front with the CPM and the CPI, could just muster a solitary seat.

The Congress, which had 23 members in the outgoing House, improved its tally by 13 seats, while the BJP’s score came down to 26 from 41. The margin of victory was not very big but it was a creditable performance by the Congress keeping in view the prevailing anti-party sentiment at the national level due to unfolding of various scams and measures.

From 1990, electors in Himachal Pradesh have voted out the incumbent in each election, replacing the BJP with the Congress and the Congress with the BJP. 2012 happens to be the turn of the Congress. Although the Congress campaign was managed by Virbhadra Singh, who is caught in a web of corruption charges, the overriding concern of the people seems to have been to vote out the Prem Kumar Dhumal government. After a full term in power, the BJP carried out a negative campaign trying to blame the United Progressive Alliance (UPA) government at the Centre for all the miseries of the commoners. While attacking the Centre for the diesel price hike, and the cap on LPG cylinders for domestic use, Dhumal had little to show in terms of his own achievements.

The political aware electorate maintained the three-decade old tradition of voting out the incumbent government and gave a clear verdict in favor of the Congress throwing aside all the predictions of a hung House. The strong anti-incumbency factor against the Dhumal government more than neutralized the impact of national issues such as price rise, corruption and FDI on which the BJP was banking on.

It has been seen over and over again in the past decade that the Congress Party places undue reliance on the strength of its policies to get past hurdles, downplaying other aspects of mass-level politics, and almost blanks them out. This is a path which is full of risks. This is specially so when the Congress is in power, and influential personalities in states cease to count, the emergence of strong regional leaders is not encouraged, and those that exist are sought to be laid low or brought on par with hangers-on of what has come to be known as the “Delhi durbar”.

In fact, it is plain to all that it is Virbhadra Singh who has single-handedly pulled the Congress’ chestnuts out of the fire in Himachal Pradesh and handed it a comfortable victory in the Assembly election. And yet half a dozen names of little consequence in the state party are being touted as possible contenders for the chief ministership through the media. Exactly this had happened when Delhi Chief Minister Sheila Dikshit won the Assembly election for the party for the third consecutive time. An air of needless suspense was permitted to cloud the mood of celebration among the rank and file.

Assessment

National issues did not figure in the two state elections. For much of its term UPA-II had distinguished itself by non-performance. September onwards it resumed governance. If corruption charges, inflation, diesel price hike and a cap on gas cylinders were to weigh on voters’ mind, then the Congress would have lost in Himachal too. The voters in the hill state did not care about graft charges against the UPA or Virbhadra Singh. Despite a late start, 77-year-old Virbhadra Singh has worked hard for the win, and reached out to dissidents, including Vijay Mankotia. Being from the state’s upper region has helped him.

The election results in these two states have brought down the BJP’s tally of controlling state governments by one and increased the Congress’ tally by the same number. A contest of a similar nature will take place between the two parties in Karnataka — where the BJP has been thrown on the back foot with former Chief Minister B.S. Yeddyurappa, a name to reckon with in the state, forming his own party after leading a rebellion within the BJP — and Chhattisgarh in 2013. These, along with the recent Assembly polls in Gujarat and Himachal, are likely to have a bearing on the framing of national politics ahead of the next Lok Sabha (lower house of the Parliament) elections due in May 2014.

US Presidential Election 2012: Barack Obama Gets Second Term in White House

Fifty-one-year-old African-American Barack Hussein Obama was reelected as the US president on November 7, defeating his Republican rival Mitt Romney in a hard-fought and expensive battle, but he will have to contend with a gridlocked US Congress.

It was not such a long night after all as Obama swept the polls, proving wrong many a pundit who had predicted a close contest, to secure himself a second term at the White House. In fact, not only did the incumbent President doggedly defend the Democratic bastions of Pennsylvania, Wisconsin and Michigan but the blue wave that he unleashed also swallowed whole the swing States of Virginia, Nevada, New Hampshire, Colorado, Iowa and Ohio — effectively shutting out all routes to victory for his Republican challenger Mitt Romney.

Obama’s reelection bid by a narrow margin gives him four more years in an American environment that is challenging by any standards. Just before he took over as the first black President in his country’s history, he faced the biggest recession that hit his homeland since the Great Depression of the 1930s.

In securing his place in history, however, he will have to continue to face the challenges of a divided nation and Congress, as the popular vote in the highly divisive election was split evenly between him and his Republican rival, Romney, at 49 per cent.

It is a vote for Obama’s stress on jobs, health-care reform and pro-gay, pro-abortion and pro-immigrant policies. Soon after the result, a relieved but energetic Obama promised “the best is yet to come”. It will, however, be a tough going for the new President as the Republicans have retained their hold on the House of Representatives, though the Senate stays with the Democrats.

Obama, however, faces the prospect of renewed challenges posed by a divided Congress with the Republicans retaining control of the House of Representatives and his fellow-Democrats maintaining their hold of Senate.

Election Process

US presidential elections are decided by an electoral college, which gives states a certain number of electoral votes based on population. A candidate must get 270 electoral votes to win the presidency.

Preliminary indications suggested that voter turnout was lower this year than the breathtaking levels that it soared to in 2008. Although it peaked at close to 70 per cent in some States such as Wisconsin, it also dropped heavily in others, by around 11 per cent in Texas.

The biggest plunge by far, according to media reports quoting a study by American University, was in Eastern Seaboard States that were still recovering from the devastation in the wake of Superstorm Sandy, which caused major property damage and knocked out power for millions, thus disrupting standard voting practices.

Obama shot past the 270 mark, garnering 303 electoral votes and winning most of the battleground states. On November 7, a final result was awaited in Florida, where the President had a narrow lead. Florida has 29 electoral votes.

Romney got 206 electoral votes. While the electoral vote margin was significant, the difference between the two candidates in the popular vote was much smaller. Obama got 50 per cent of the popular vote compared to 48 per cent for Romney, a Mormon. In all, Obama won 25 states and the District of Columbia, while Romney won 24 states.

In the 100-member Senate, the Democrats now have 52 seats, a net gain of one seat. The Republicans are left with 45 seats, with a net loss of one seat. Two independents usually caucus with the Democrats.

Two Republican candidates who had made controversial comments on the subject of rape and abortion during campaigning ended up losing the race. Both of them were Tea Party favorites – Richard Mourdock of Indiana and Todd Akin of Missouri.

Road to Success

Undoubtedly, it is true that for all his achievements, including the risky directive to get Osama Bin Laden in his Pakistan hideout, Obama’s four years are a litany of broken promises. He dramatically announced the closure of the notorious Guantanamo prison complex in a year and made a clarion call to the Muslim world from Cairo and promised to resolve the Israeli-Palestinian conflict. Guantanamo is still very much in existence and the Palestinian plight in overthrowing Israeli rule has never been more desperate, with more and more Palestinian land being colonized with little more than hand-wringing from the Obama administration.
On Guantanamo, he met stout Republican opposition in Congress, and on Israel he was up against the insurmountable Jewish lobby’s hold on the American political system, which has supported and helped the Israeli state in every way since the British departed from the region. It is an indication of Tel Aviv’s ability to influence US policy in the Middle East, as the world calls it, that going against Israel’s interests, whatever the cost to Washington, is a sure road to calumny and oblivion for any American leader.

Focus on Challenges

It is equally true that Americans are tired of fighting wars, particularly in the Arab and Muslim world, and American help in the overthrow of Libya’s Muammar Gaddafi was described as “leading from behind” by placing the European powers in front in the Nato air war camouflaging key US inputs.

The Iraq war, perhaps the greatest mistake of the George W. Bush presidency, was wound down and a timeline was set at 2014 for withdrawal from Afghanistan. In addition, President Obama has been seeking to temper Prime Minister Benjamin Netanyahu’s belligerence on Iran.

President Obama’s priority must, however, be to make the congressional system work. There are many anomalies in the US electoral system — for instance, Electoral College votes based on state quotas trumping the popular vote — and the President’s right to appoint justices of the Supreme Court is flawed.

It is expected that Obama will push for higher taxes on the wealthy so as to trim down the debt burden and also generate money for his pet programs. Equally importantly, he will try to cut a massive financial deal with Congress in the coming months to reduce the budgetary deficit.

Foreign Policy Issue

Barack is unlikely to do any major change on the foreign policy front. This is a comfortable scenario for India because Obama had amended his policy initiatives vis-à-vis India after his pro-China posturing during the initial months of his first term. He quickly realized the merits in the policy pursued by the George W. Bush administration which had clinched the historic nuclear deal with India. It was a matter of relief for India when he ultimately reverted to Bush’s policy, which was aimed at containing China to protect US interests in East Asia. Attempts at the containment of China were essential as most countries in the region are scared of an over-assertive China, which sees itself as the future superpower.

However, Pakistan and Iran must be feeling uncomfortable with Obama’s reelection as US President, as there is unlikely to be any let-up in the drive to prevent Tehran from acquiring nuclear weapon capability and the targeting of Taliban activists in Pakistan’s tribal areas through drone attacks. Of course, Barack Obama, whose forefathers were Muslim Kenyans and who spent his early childhood in Indonesia, no longer has to prove that he cannot be soft toward these countries posing threat to global peace. The truth is that no US President can afford to be lax towards terrorists or an Iran which is considered more dangerous for peace in West Asia than Israel by US allies like Saudi Arabia.

Boost to Indo-US Ties

Obama’s reelection is a good news for the Indian economy, although balance will have to be established between rhetoric and practicality on prickly issues like outsourcing of IT services.

With elections out of the way and status quo maintained, India Inc is betting on increased focus on reviving growth in the US which will also lift its own fortunes and also spur growth across the world. Being one of India’s largest trading partners, the US accounts for more than 13 per cent of total Indian exports and 60 per cent of IT exports.The recent reforms initiated by the UPA government are expected to enhance the Indo-US economic partnership.

The US accounts for more than 13 percent of total Indian exports and 60 percent of IT exports. The feeling is that Obama’s win will ensure continuity in growing India-US relations.

The issue of curbing outsourcing, which Obama made a poll plank, remains to be sorted out. Indian IT firms hope to get an opportunity to partner with US companies to achieve growth targets.

India’s exports to the US grew from $17.24 billion to $19.61 billion, showing a growth of 15 per cent during April-September, 2012, over the corresponding period last year. The share of the US in total exports went up to 13.88 per cent and it has surpassed the UAE as the prime destination of India’s exports.

On defense front, Obama’s reelection is set to boost the defense relations between New Delhi and Washington with focus on technology sharing, joint research, co-production of defense equipment and increased military engagement.

In his first term in 2009, Obama had opened the gates for US companies to enter the multi-billion dollar Indian defense market that was essentially dominated by the Russians and Israelis. As a result, India placed a huge order for US-produced defense equipment worth $9 billion – approximately Rs 47,000 crore. Obama’s second term promises even more deeper ties with India. It was illustrated by US Defense Secretary Leon E Panetta visit to India in June when he listed out several long term partnerships in the defense sector.

In the past four years, New Delhi has ordered medium lift transport planes (C-130-J), heavy lift planes (C-17 Globemaster) and long-range maritime reconnaissance planes (Boeing P8-I). The ties took a significant upswing last month when India gave nod to the purchase of Boeing ‘Apache’ attack chopper.

Assessment

The US president presides over a superpower on the retreat and is more concerned about fixing economic problems back home rather than playing the global “supercop”. By and large, he has not created or aggravated tensions. Having friendly relations with India may be part of the US policy to counter the rise of China, but the change has not hurt India’s interests.

To what degree Obama is successful in this regard will depend on how well he can reach out to the Republicans. He will be well advised to do so with utmost sincerity, as this and other such deals will determine his presidential legacy, which otherwise stands the risk of being rendered hollow by petty partisan politics. All it needs is a new resolve to move away from strange ideologies and beliefs that seem to thrive in the free American air to the detriment of logic and common sense.