Suresh Prabhu's track record in power sector could shape his dream for Railways: J P Chowdhury

According to Chowdhury, though some of the announcements like targets to raise Rs 8.5 lakh crore appeared too grand a vision to be realistically achievable, he believes Prabhu's past performance in reforming the power sector could give form and shape to his dream in steering the railways this time.

Do you think the Rs 8.5 lakh crore investment over 5 years is somewhat unrealistic considering the department's track record?
Actually the government's own finances are very weak so they will have to depend on innovative funding sources, and the private sector would be the conduit for that. When he says that the department would raise funds from multilateral funding agencies, states or even appealed to the Members of Parliament to set aside some money from their MPLAD funds for the railways, it indicates that although there is a financial shortage, the ministry is pragmatic with a message that money would be arranged from wherever possible. In this, we see a good opportunity for the private sector.

But don't you see a bit of naivety in such a grand pronouncement?
Whatever targets he has set for himself are very ambitious. The key thing would be implementation. There is no dearth of right intention, and we are hopeful, particularly because of his track record in the power sector. Also, if you look at his approach like refraining from announcing a slew of trains, he has stuck to the core idea of the budget. We have seen what happened during the earlier government when despite concepts like Public Private Partnership (PPP) models being in place, implementation never happened and this eventually played havoc with the economy.

This time the minister has re-looked at the PPP model in a fresh way although intention of having partnership for joint ventures is more with states and public sector companies rather than the private sector.....
We don't see private sector will lose out. The private sector, particularly the wagon makers like us would stand to benefit. To illustrate, say Coal India forms joint venture with the Railways for transportation of coal. Then the private sector would benefit as manufacturer while Coal India would be the financier and Railways the carrier.

The minister talked about revisiting the Wagon Leasing Scheme, an initiative which is important for wagon makers like Titagarh. What exactly are the problems this scheme is facing?
There are issues like conflict of interest as the Railways were party to contracts and it was the regulator too. This conflict of interest acted against private sector in instances like when haulage charges were raised unilaterally. We had made representations to the ministry and the speech shows that our concerns would be addressed. Apart from reworking existing schemes, he has also come up with innovative new concepts like on-time freight trains, an idea which I have been suggesting for many years.

The minister has focused on redeveloping station infrastructure, where efforts, in his own admission, were not met with much success. Your comments
For the Railways, stations are the most costliest yet most under-utilised piece of real estate. Most of the stations in our country rises only up to the second floor and whole space above it are not used. Why can't we make multi-storied buildings above the railway stations? A person can get down from the train, take a lift and reaches his office. Why can't that happen? At every major junction station in every metro city, several million sqft of real estate area could be developed. It's huge opportunity and its good that the minister has identified that.

Regarding wagons, the minister talked of faster goods train and devising schemes to ensure they don't run empty. Will these steps help generate more demand for wagons?
Overall it would, mainly because to achieve such level of efficiencies, a lot many wagons in poor state would have to be scrapped leading to higher demand for state-of-the art efficient wagons.

If the budget is all very good, what according to you led to heavy selling in railways related stocks?
This I think happened because of announcement of hike in freight rates. Stock market is driven by sentiment, which got impacted because of this step.

Don't you think continuous rise in freight rates would lead to shift in traffic to roads from tracks?
Railway freight rates are still cheaper compared with road. Anyone having wagon availability would prefer railways than moving the cargo on trucks.