Suresh Prabhu, Railway Minister, addressing National Management Convention (Source: Twitter/@sureshpprabhu)

Suresh Prabhu Makes Reform History

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There is a lovely story about Suresh Prabhu, now minister for railways in the Narendra Modi government.

As minister for power in the Atal Behari Vajpayee government he was busy introducing reforms in the power sector. His political leader, the late Bal Thackeray, wanted him dropped from the government and replaced by someone else. Prime Minister Vajpayee was keen that Mr Prabhu continue in his job and do the good work he was doing.Mr Vajpayee sent a senior colleague to Mumbai to convince Mr Thackeray. The minister spoke at length about the good reform work that Mr Prabhu was doing and how the PM wanted him to continue.

“Reforms?! What reforms?” the “Tiger of Mumbai” roared. “I did not send him to Delhi to do reforms!”
I am under obligation to the gentleman who narrated this not to report the rest of that conversation! Prabhu had to be dropped. Vajpayee retained him as chairman of a committee on river waters with cabinet rank.

Suresh Prabhu is a rare politician. The kind who is ready to give up ministerial power, pelf, turf and privilege in the interests of institutional reform.

That is why Prime Minister Narendra Modi made him minister for railways. Mr Prabhu has been busy reforming the Indian Railways. But the biggest reform he has just signed onto is to give up the one reason why so many high profile politicians have sought the railways portfolio in the era of television. By merging the railway budget with the Union budget Mr Prabhu has given up the opportunity to appear on prime time television for an extended 90 minutes or more.

The idea has been around for a long time. Newspaper editors will recall writing editorials seeking just this over the past decade and more. If the Vajpayee government changed the time of presentation of the Union budget from 5.00pm to 11.00am, the Modi government has changed the date from the last day of February to the first day of that month.

The latter change is less radical but could be the first step towards a change in the Union government’s financial year. It was the imperial government of British India that chose the 5.00pm time so that the colonial government’s budget proposals could be communicated within the day to the Parliament in London. Finance ministers liked the 5.00pm timing because they would be on TV through most of the evening.

Along with the change of date, finance minister Arun Jaitley also announced changes in the accounting system, accepting a recommendation of the finance commission, dropping the distinction between plan and non-plan expenditure. This is a logical consequence of the winding up of the Planning Commission and the end to five-year plans. This is a change that Prime Minister Modi had said he would want to effect when elected.

In itself these are not necessarily radical changes. The winding up of the railway budget would have to be followed up by the corporatization of the railways. That would mean Mr Prabhu’s ministry would have to be wound up. Would the next logical step be a winding up of the civil aviation ministry?

The ministries for railways and civil aviation are anachronisms in the modern world where transport systems have become increasingly professionally managed. In a sub-continental, developing economy like India the railways and the airlines have to, of course, also serve larger national objectives like providing connectivity to regions with low traffic and for social groups that cannot afford commercial rates. These objectives can be met through targeted and explicit subsidies. The government does not need a ministry to offer and implement such subsidized routes.

So, while the change in the dates and structure of the Union budget cannot be termed as ‘reforms’, the merger of the railway and Union budget is certainly a reform measure. Needless to reiterate, this should followed up by modernization of management systems within the railways.

Mr Prabhu has said that he would rather make railways real estate a profit centre than passenger fares. The plan for commercial use of railways real estate, including railway stations, should also be undertaken by a transparently honest politician like him.

Railways have once again re-emerged as an important means of travel and movement of goods around the world. In the developing world India had taken the lead in railways modernization, but China has long overtaken India and has emerged as a railways superpower. China has built modern railway systems across Eurasia connecting the Pacific to the Atlantic. India has to catch up in railways modernization and expansion. The task is cut out for Minister Prabhu.

Sanjaya Baru is director for geo-economics and strategy at the International Institute for Strategic Studies, and former media advisor to Prime Minister Manmohan Singh.

The views expressed here are those of the author’s and do not necessarily represent the views of BloombergQuint or its editorial team.

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