Merging Railway Budget with Budget 2017 a Good Step: Tilak Raj Seth, Siemens

Sharing his views on the merger of the Railway Budget with the main Budget Tilak Raj Seth, Executive Vice President (CEO of Mobility Division) at Siemens said, “Railways is a prime mover of our economy. Merging the two budgets is a good step, but the focus should not be lost.”  Few excerpts of his interview below:

Stating that a glimpse of the five-year budget plan was already given last year by Railway Minister Suresh Prabhu, Tilak Raj Seth, Executive Vice President (CEO of Mobility Division) at Siemens Limited told FE Online that Railways will continue on its 5-year plan path. “For the first time, last year Railways decided not to announce any new lines and trains. I believe that this year, the Railway Budget, as part of the main Budget, will continue with the strategic focus, keeping the 5-year plan in mind,” he said.

Sharing his views on the merger of the Railway Budget with the main Budget he said, “Railways is a prime mover of our economy. Merging the two budgets is a good step, but the focus should not be lost.

When you combine the two budgets, you should not miss the focus required on Railway expenditure.” “Over the years, the Railway expenditure is smaller when compared to the rest of the national budget. Railways depends on extra sources of budgetary support and the gross budgetary support. So, it makes sense if Railway Budget is made a part of the main Budget,” he added.

Suresh Prabhu is an out-of-the-box thinker; is working to move Railways from ‘vicious to virtuous’ cycle – says Tilak Raj Seth

This is the first time in 92 years that the Railway Budget will be a part of the main Union Budget, and will not be presented separately by the Railway Minister. In a radical reform, earlier this year, Finance Minister Arun Jaitley accepted Railway Minister Suresh Prabhu’s proposal to merge the two budgets. The move to discard the age-old practice of a separate Rail Budget is part of the Modi government’s reform agenda. The most important thing is that after the merger, the Railways would not have to pay dividend to the central government and its capital at charge would stand to be wiped off. The Railways used to pay up to Rs 10,000 crore as dividend to the government.

Railway Budget is a popular part of the whole Budget exercise, especially for the common man who wants to know if any new trains will be introduced and whether passenger friendly amenties have been announced. However, it is likely that this time the Finance Minister may just table the Railway Budget components.

Q: What is your take on the Railway Budget being merged into the main Budget?

Railway Budget has historically been separate because a large part of the government expenditure was Railways. At that time, perhaps the rest of the government expenditure was equal to what was spent on Railways alone. Over the years, the Railway expenditure is smaller when compared to the rest of the national budget. Railways depends on extra sources of budgetary support and the gross budgetary support. So, it makes sense if Railway Budget is made a part of the main Budget.

However, when you have a separate Railway Budget, there is focus on Railways. Railways is a prime mover of our economy. Merging the two budgets is a good step, but the focus should not be lost. When you combine the two budgets, you should not miss the focus required on Railway expenditure.

Q: Do you have any specific expectations from the upcoming Budget?

A glimpse of the five-year budget plan was already given last year (by Suresh Prabhu). We think that Railways will continue on its 5-year plan path. For the first time, last year Railways decided not to announce any new lines and trains. I believe that this year, the Railway Budget, as part of the main Budget, will continue with the strategic focus, keeping the 5-year plan in mind.

Q: If you had to give Railway Minister Suresh Prabhu one out-of-the-box idea, what would it be?

He is quite an out-of-the-box thinker himself. He has said that he needs to break the vicious circle into a virtuous circle. If you don’t invest, then the assets are not put into place, if the assets are not put in place then the throughput is not enhanced, revenue doesn’t come, and in turn you cannot invest. Railways has been part of this vicious cycle and Prabhu has said that we need to invest and increase our assets which will improve the throughput. His focus is very much there.

One idea that to my mind is important, though it is not really out-of-the-box, is integrated mobility. This is getting lesser attention in our country than it needs. Rail-based transport uses the least resources per passenger kilometre or per tonne kilometre for freight. It is the most efficient mode of transport. But you cannot complete your entire journey on a train, it can’t come to your home. You need a full dedicated plan for integrated mobility. Railway minister is a critical member for ensuring integrated mobility. This means that the modes of transport must be complementary in nature rather than competing with each other. An 8,000 km journey cannot be completed by a train, you need a plane for that.

Q: But aren’t they competing? Air India is taking out ads saying that air travel is cheaper than Rajdhani?

In a country like India with 1.2 billion people, there is space for everything. Railways had a huge share in transportation at the time of independence, but now it has fallen, because it has lost out to roads. That has happened because, we have 68,000 km of track today, and over the last 7 decades, the addition in our tracks has not been too much. If you compare these numbers to China which has added nearly 5 times of what we have added. This does not mean that if we had added more then roadways and aviation would not exist as options. But at least then you would have more choices.

Let me take the example of Germany. There are dedicated tracks, but high-speed trains also run on normal tracks at normal speeds. They then get on to another high speed track and move at high speeds. This is called interoperable. Interoperability will be one item which India will eventually see. Siemens will not invest in Maglevs anymore because we feel this technology doesn’t make sense. The only Maglev still running in the world is in China. There are also test tracks here and there, the real economic commercial operation is in China.

Plus, today Railways is moving bulk commodities. For Railways, the major source of revenue is freight, passenger fares are subsidised. Freight is also linked significantly to bulk movement, which means low value and high volume. If you want to make it more commercially prudent, then you also need to carry more value and less volume. You have to promote the white goods manufacturer to choose Railways as a priority. What manufacturers need is unhindered service and faster response.

India still requires high integration of various mobility modes. Take the example of Delhi, many new lines have been added, you also have the Delhi Metro, yet there are problems of traffic. This is because Delhi lacks an integrated network of transport.

At a pan-India level, take the case of the Delhi to Mumbai Rajdhani, the journey is said to be overnight, but it isn’t really because the train leaves at 4:00 PM and reaches next day morning at 10. It’s a total of 17 hours. So, if somebody has to make a choice of air versus rail, they would choose air, also because at times the fares are similar. Now, if this journey time were to come down to 11 or 12 hours, then it would truly be overnight. There is no need to stay in a hotel. All this is possible if modern means of transport exist. Plus, integrated mobility does not mean the entire journey on rail. You then require e-mobility or an e-bus. There are plans under smart cities, such as Surat, where there are plans to create an inter-modal hub, using both rail and road networks. Railways still gives a momentum to mass movements.

The first priority should be to increase the throughput on the existing network. Freight rains are moving at 28 km/hour. We may be building dedicated freight corridors, but the rest of the system needs to be modernised. Only 27,000 km of tracks are electrified, we need to electrify the rest of them, so that we can take the advantage of the best throughput on the existing networks. If things are moving at a very high speed then they require a long length of the track to be already clear. Higher speed doesn’t always enhance the throughput. You need many things for that to happen. The first thing that you need is to get modern signalling. Once the throughput can be enhanced, then you can have higher speeds as well. Take the example of a road, if you drive at a very high-speed and reach a signal, unless the signal is green and the road ahead is clear you cannot move forward. So speed alone is not sufficient.

Q: India is looking to invest in high-speed and Maglev trains. Where does Siemens see itself fitting into that plan?

The Maglev technology belonged to Siemens. Maglevs in China were made by an organisation called Trans Rapid, which is part owned by Siemens. Siemens still feels that the conventional rail-wheel high speed makes more economic and technical sense. Imagine a distance of 500 km, you will be able to traverse that in Maglev in around 1.5 hours. These distances can also be done by aviation in that speed. If you talk of up to 300 kmph speed, which is rail wheel, you would have spend 2 hours. This time differential does not really warrant or aid Maglev usage. Maglev is not a technology challenge, but it doesn’t make economic sense. Talking about high-speed you can have dedicated tracks, like the upcoming Mumbai-Ahmedabad. German government is also talking to India about the Chennai-Benagluru-Mysore corridor. Right now that is at a phase of feasibility. All high-speed corridors that India will have will be new tracks. Then we would not have used the 68,000 km of existing tracks. At some places it is not possible to run at high-speeds, but you would still not like to do it in an non-inclusive manner.

Let me take the example of Germany. There are dedicated tracks, but high-speed trains also run on normal tracks at normal speeds. They then get on to another high speed track and move at high speeds. This is called interoperable. Interoperability will be one item which India will eventually see. Siemens will not invest in Maglevs anymore because we feel this technology doesn’t make sense. The only Maglev still running in the world is in China. There are also test tracks here and there, the real economic commercial operation is in China.

Q: You were talking about China in context to the Indian railway system. What lessons can Indian Railways learn from international rail transport systems?

The Railway minister is taking a lot of steps. Railways need to play a vital role and not lose out to road or aviation. Secondly, our pace of electrification and modernisation is a little bit slower. The pace needs to be enhanced. Some projects are already in the works. Mechanised electrification needs to happen in dedicated freight corridors etc. Measures are also being taken to upgrade the rolling stock. What is required is to catch up on the speed of implementing these measures.

Q: You have acknowledged that Suresh Prabhu an out-of the box thinker. In your view, what is his one biggest achievement as the Railway Minister?

Transparency. He has reformed the procurement policy. He has de-politicised and de-centralised it. Earlier, for more than Rs 100 crore procurement, the Railway ministry used to decide. Now, regardless of the limit, the decision can be taken by the respective railway general managers. He has empowered them. By this he has also added accountability.

Q: What is your take on the flexi-fare system that Railways has introduced for Rajdhanis, Shatabdis and Durontos?

Railways needs to play a national role. Secondly, Railways also needs to be a commercial organisation. Railways needs to find a way that the national role is not lost and the commercial role is also intact.

In areas where more fares should apply, they should be applied. Why should everything be subsidised by Railways? This is the most challenging task of the Railway minister. Across the world, the youngsters in urban areas don’t want to own a car. They are able to move on rail. Railways has a dual role. It must ensure that in this dual role they don’t end up doing the national role under a commercial hat and vice versa. For example, I don’t think Mumbai is a city where fares cannot be enhanced. On an economic setting it is possible. To the best extent that the fares can be altered and made flexible, and this should be leveraged.

Q: Sum up in your own words, the vision and the journey of the Indian Railways, the way it has been and where you see it going..

Yatri ki garima, rail ki gati aur desh ki pragati. This is the phrase Prabhu used in the last Budget. That’s what he is working towards. The second element is that he has grasped the trap of the vicious cycle and he has found ways to break that vicious cycle. There is talk of high-speed trains in the country. High speed goes hand-in-hand with semi-high speed. On our existing networks we need to take trains to the speed of 160-200kmph. Third, through put is a critical element which can be enhanced by measures on such as improved rolling stock and infrastructure.

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