Last update: Sat, 06 Feb 2016 02pm
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Pakistan Railways

The National Assembly Standing Committee on Railways has made several recommendations to steer the department out of its financial troubles, proposing among other measures, that the Rs 4 billion State Bank overdraft be waived or converted into equity, and that the government should take over the liability of foreign loans (worth Rs 26.6 billion) and pensions funds (Rs 6.50 billion annually). The committee also expressed concern that the government decision to cut developmental programme allocations has badly affected Pakistan Railways (PR), and that its budget has been reduced from Rs 13.6 billion to Rs 7.3 billion.

It goes without saying that the PR is an essential service and hence needs to be saved from the mess it has gotten itself into. Towards that end the government ought to take at least four steps. First, it must restore the previous system of a separate budget for the railways that is presented in parliament and approved by it; second it must clean the railways balance sheet of its losses and for doing this one possible option could be issuance of bonds as done in the case of Wapda and third, it is imperative for the government to undertake a restructuring exercise. The department must be run by a professional hand rather than political appointees who tend to use it to distribute jobs to party supporters and sympathizers, thereby overburdening it with people who have little to contribute but a lot to take out in the form of salaries and pensions. The NA committee while recommending restructuring has proposed transparent procedure for the selection of executive officers. More importantly, it said that the Railway Board should be reconstituted so as to include professional experts as its members. Fourth, there ought to be a substantial increase in the goods to passenger trains ratio. Since train is the common man's mode of transportation, fares are generally kept at a low level. The real source of revenue for the railways the world over are freight trains since they are the cheapest mode of land transportation and an efficient one, too. We have the example of India before us, where increase in freight trains has proven to be a major factor in making its railways a profit making entity. Considering that at present PR faces a severe shortage of locomotives leading to discontinuation of passenger services on many traditional routes, it would be advisable at this point to add, as far as possible, freight carriages to passenger trains. The best hope for the PR's turnaround is maximising goods transportation. The proposed restructuring effort must pay due attention to this aspect of the operations.