Monday, August 13, 2007

A Letter to PM and Planning Commission

Dear esteemed planning commission and esteemed prime minister:

Thank you for taking a broader view on higher education for India.
I hope your actions will correct the past imbalances.

I would now like to bring to your notice how Indian Railways in its quest for profit
is forgetting the poor and backward areas of India (except perhaps the home state
of the Rail Minister).

There is a jocular saying in the west: "I owe my success to my first wife. I owe my second
young beautiful wife to my success."

The situation with the Indian Railways under the current Rail Minister is similar. A big part
of the profit that it makes comes from freight transfer from mines most of which are located
in backward areas of Orissa, Chhatisgarh and Jharkhand (the first wife). However, most of the new and
humongous plans that the railways has for the 11th plan bypass these states (I.e., they go to the
second wife.)

For example, the first phase of the freight corridor does not touch these states. Most of the high-speed
corridors that are bandied about do not touch these states. Nor the cities where metro rail is
being talked about are from these states. May be the cities in these states do not yet
need a metro rail.

However, what these states, especially Orissa is asking is to connect its remote and backward
areas to the passenger Rail networks; man of these areas are the area served by zones that make huge
profits by transporting freight from mines in those areas.

Lets go over some data on this:


For the 2003-2004 and 2004-05 the working expense as part of gross earnings
of the ECOR zone is the second best at 66.64% and 61.75% respectively.

•The other profit making zones in those years were
–South east central (62.8% and 56.1%), North central (76.33% and 66.71%),
–Central (80.29% and 82.48%), South eastern (81.24% and 83.51%),
–South Central (85.72% and 83.62%), West Central (80.99% and 84.08%),
–South Western (91.35% and 86.15%), Western (93.21% and 90.85%),
–Northern (91.08% and 92.89%) and East Central (93.65% and 98.9%).

•The loss making zones were
– metro Kolkata (247% and 264.38%), North Eastern (151.93% and 160.88%),
–Northeast Frontier (147.98% and 159.45%), Eastern (161.3% and 152.84%),
–Southern (118.55% and 120.79%) and North Western ( 106.26% and 104.98%).

The above is illuminating; in some sense the poor and backward tribals and
their land in ECOR is generating profits that is being ploughed into
subsidizing the commuters in metro Kolkata.


Interestingly, the 2004 Railway budget by the NDA government
proposed (See items 35 and 37) the "Remote Area Rail Sampark Yojana." This program would have spent Rs 20,000 crores to connect the poor, backward and remote areas of India.

Following is the exact wording, in items 35 and 37 of the 2004 Railway budget.

* 35. Railways have a large shelf of over 230 projects worth about Rs. 43,000 cr, for construction of New Lines, Gauge Conversion, Doubling, Electrification and Metropolitan Transport Projects. Even with the enhanced budgetary support, non-budgetary initiatives under National Rail Vikas Yojana and other cost sharing mechanisms apart from Defence funding of some projects of strategic importance, there will still be projects valuing Rs. 20,000 cr which would remain unfinished even after the next five years. A large number of these have been sanctioned on socio economic considerations with the intention of connecting remote and backward areas with the rail network. However their progress is very slow on account of inadequate funding, which causes dissatisfaction. Connecting these areas with the rail network will facilitate the economic and social development of these areas and will provide major employment opportunities during construction and thereafter. Keeping these factors in mind, it has been decided to speed up the execution and completion of these projects also in the next five years. I am happy to inform the House that this would be done through an ambitious 'Remote Area Rail Sampark Yojana', with an additional outlay of Rs. 20,000 crore.

* 37. This decision to accelerate the completion of all projects in five years is expected, on a broad estimate, to provide yearly employment to about 3 lakh persons during the construction period. Once opened for traffic, these lines would also require about 18000 persons per year for normal maintenance and operations, on incremental basis. Apart from this, it is expected that there will be scope for indirect employment of nearly 55000 persons per year. The 'Remote Area Rail Sampark Yojana' will go a long way in changing the economic and social scenario of the remote and backward regions of the country and bringing the people of these areas into the mainstream. Further, the demand for steel, cement, rolling stock, fittings, components, plant and machinery will also be generated, boosting the economic growth of the entire country.

As clear from above this would have had a significant impact on the backward areas of India such as KBK districts of Orissa. Following are some statistics of KBK districts.

•KBK districts are the most backward districts in Orissa as well as India.
–Population below the poverty line in southern Orissa (of which KBK is a part) is reported to be 89.17% of the people according to the 1999-2000 NSS data and 72% of the families according to the 1997 census.
•The tribal population percentage of the KBK districts are as follows:
–Malkangiri 58.36% (+19.96% SC), Rayagada 56.04% (+14.28% SC), Nabarangpur 55.27% (+15.09% SC), Koraput 50.67% (+13.41% SC), Nuapada 35.95% (+13.09% SC), Kalahandi 28.88% (+17.01% SC), Sonepur 22.11% (+9.5% SC), Balangir 22.06% (+15.39% SC).
–Two adjacent districts also have high tribal population. They are Kandhamala 51.51% (+18.21% SC) and Gajapati 47.88% (+8.77% SC)

The previous planning commission
in its report comparing the development status of economic infrastructure of Orissa, especially the KBK region, vis-a-vis the country says:

–"Railways have always played an important role in the economic development and rapid social transformation in all parts of the globe. It is one of the key economic infrastructures.
However, it is most unfortunate that in a poor and backward state like Orissa, development of rail networks has received much less attention of th eCentral government in the post-independence period."

But that does concern RM Lalu Yadav. To him only poor people in Bihar (and Amethi and Kerala) matters. Tough luck, if they are in other states.

The following shows how Lalu's railway is sitting on the RARSY.
It talks about involving states. The 2004 railway budget did not mention
asking states to give matching funds.
Railway Standing Committee Report 2005-06

Page 19:

To bridge this gap and considering the slow progress, projects especially in backward,
underdeveloped and remote areas due to constraint of resources, Government had
announced "Remote Area Rail Sampark Yojana" (RARSY) in the Interim Budget
2004-05 which envisages investment of about Rs.20,000 crore in a period of 5 years
on ongoing projects taken up on socio-economic considerations. However, the funds
for the Yojana are yet to be tied up. Government in has attached priority to
infrastructure development. Keeping this commitment in view, a proposal has
been mooted for creation of Remote Area Rail Infrastructure Fund for financing the
RARSY. If the Government approves the funding of this Yojana, all the ongoing
projects will get completed in five years. The yojana is being processed in
consultation with the Ministry of Finance for approval of the Government duly
identifying the funding sources. A note in this regard is under process in the
Ministry for consideration of Government.

3.10 Giving the details of the new initiatives to address the foregoing funds
constraints, the Chairman, Railway Board stated as under:-
"Over the last few years, certain initiatives have been taken to see how we
will fund over projects so that the pace of adding new lines, gauge
conversion and doubling speeds up. We have introduced funding through
defence for strategic lines. We have got some of the projects declared as
the national projects where the funding is given directly by the Government.
We have also initiated private participation in some cases, we have also
launched the Rail Vikas Nigam Limited which is generating funds through
various sources including the market borrowing. Our need was to generate
about Rs.47,000 crore to take care of the projects on the shelf. Out of this,
we found that we can generate about Rs.12,500 crore or so out of the normal
Budgetary support as per the past trends. We would be generating about
Rs.18,000 crore due to the new initiatives that have been taken in the past
few years. It still leaves us a gap of about Rs.17,000 crore to take care of
the projects which are by and large non-remunerative projects but they are
on the shelf. These are the projects which are connecting distant areas,
backward areas. They were sanctioned on socio-economic considerations
and so many other considerations. Even for the sum of Rs.17,000 crore,
which is our requirement, in the year 2004, in the Interim Budget, a scheme
of Remote Area Rail Sampark Yojana was introduced. We are yet to finsalise
the funding pattern under this scheme. The effort is to involve the State
Government's participation into this scheme as also through other means.
We are yet to give it a final shape."

3.11 In response to the concern of the Committee as to why the completion
targets of the projects are not being fixed, the Chairman, Railway Board stated as
"most of these projects will not be completed in the next few years. In fact,
the projects where target has not been given is because normally we give
targets for projects which are going to be over in the next two to three years.
But where it is going to be a distant period and where we do not know as to
how much funds would be allocated for these projects, we do not give targets
for those projects. So, wherever targets are given these are the projects
which will take more than two to three years to get completed depending on
how much funds are given. On our part, we have tried to revive the Capital
Fund to see that we can put in more money.

Page 22: Talks about National Projects

3.12 In the absence of adequate internal generation of revenues by the Railways,
the following projects has been declared by the Government as the national
Projects in the National interest. The funding for these projects are ensured
by the Central Exchequer in the form of additional Budgetary Support to the Railways.

THE following world bank reports adds to the 2004 RAIL budget in that it says
the central govt. was expected to take care of full funding of
the rail lines to the remote areas.

June 2006 report

The second project envisaged by the railways
was announced in the interim Budget of 2004-
05 and is called Remote Area Rail Sampark
Yojana (RARSY). This involves executing and
completing hitherto sanctioned projects related
to connecting remote and backward areas with
the rail network till 2010. The total investments
in these projects is valued at Rs.200 billion.
Presumably this is to be entirely funded by budget

page 70 above Table A8


Concluding comments: We understand that the NDA 2004 budget
did not quite say where the money for the RARSY was going to come from, and it was
made with an eye to the election.

However, as India moves forward:

* it can not just forget its backward and tribal areas; while Indian Railways makes plans
for freight corridors, bullet trains, and metro rails.

* as the largest employer IR can not just forget making employment centers in its backward and tribal areas,
and focus only on the backyard of its Rail Minister, its alliance Chairperson, and states
ruled by its allies (Kerala)

Being familiar with Orissa, in the context of Orissa, I request that you put some sense into
the Railway leadership (the Rail Minsiter, and the Railway Board) so that they plan to

(a) Finish the KBk connecting lines such as: Khurda-Balangir,
Gunupur-Theruvali, and
Lanjigarh Rd - Bhawanipatna - Junagarh-Nabarangpur-Jeypore-Malkangiri-Bhadrachalam Rd and

(b) establish a job center (like a rail factory) in the backward and tribal KBK region.

Chitta Baral

Chitta Baral
Professor, Arizona State University

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