Thursday, July 9, 2009

Indian Railways a Social Venture?

Mamta Bannerjee presented a wonderful Railway budget this year with lots of emphasis on improving the railway infrastructure of the country which is coming under pressure due to rising population. Apart from announcement of new trains the schemes for backward areas, budget tickets for students and nonstop trains came as the pleasant surprise this year.

Inspite of all these good announcement there were few sweeping statements made during the budget session, one of them was “Indian Railways are not a profit oriented Enterprise but a Social Enterprise “.I beg to differ on this completely.

No social venture is sustainable unless it makes steady profits and shows a growth in future. I think that we are all now reaping the benefits of the profitability of the Railways in last 5 years. Only when a company makes profit, they can be reinvested and utilized for fulfilling some of the social commitments. No institutions will even lend to the institutions which are disoriented towards the profit aspect of business. A cliché statement but very appropriate for this discussion, “Wealth Maximization should be the ultimate goal for any corporation”.

Another observation about budgets is the lack of visibility on the implementation aspect of the various schemes. The government commits huge sums of money towards the development schemes but lot of funds leaks during the bureaucratic process. I believe we need a new department for reducing the inefficiencies of the various ministries by developing the implementation strategies of various schemes in close coordination with the ministries.

4 comments:

gary said...

paise lelo... ticket to dedo....
Issues are that if you want to travel within a months time then its almost impossible to get a railway ticket.
Trains neeed to be faster with changing frequency according to the load.
It still takes 26 hours from Pune to delhi where the ground distance is like 1200 kms. Thats really a waste of time.

SiD said...
This comment has been removed by the author.
SiD said...

One more good thing about the rail budget: General class tickets now available at post offices.. they will have some work...:D

and on the issue of social venture.. i beg to differ with your views.. though had u asked me a few months ago, i wud have agreed.. but experiences in IOC show that such social ventures are needed if a country like India has to grow.. just a small example.. if you are targeting profits, you wont go to extreme corners of the country which are not "viable" but with railways and oil companies are incurring losses to go there so that those areas dont become outsiders and develop like the rest of the nation...
coincidentally yday I was trying to formulate an outline for a blog on the issue :)

Ankit said...

@ Gaurav Yeah important point Gaurav , Totally agree with you .

@ Sid , I am not saying that we should Milk the railways to maximize the profit , we need cross subsidization , the phenomena where people in AC class paying higher for new infra development and reducing the cost for other passengers .

My point here is that in order to lay any development agenda , you cant just make them loss making and try to help the complete India.

In order to help others you need to be first yourself very strong ! :-)