Trivedi ignored his boss; maybe Pranab should do the same

After Railway Minister Dinesh Trivedi, who put the interests of the country and the Indian Railways ahead of that of his party, maybe Finance Minister Pranab Mukherjee needs to do the same. What he does with the general budget on Friday is even more crucial to this country’s economic well-being than Trivedi’s. Here are the parallels between what happened in the railways and what is happening in the economy. Income and Expenses The Indian Railways’ finances have been slipping badly, and in 2011-12, revenues have fallen sharply and expenses risen. The operating ratio has soared from the budgeted 91.1 percent to 95 percent. The general budget faces an even worse situation. Revenue growth has tapered off, and expenses, especially subsidies, have ballooned to unmanageable levels. [caption id=“attachment_245123” align=“alignleft” width=“380” caption=“FM was the man who approved the Railway Budget, not didi. PTI”]  [/caption] Profit and Loss Despite everything, the railways at least made a profit at the end of the day of around Rs 1,500 crore in 2011-12. A skimpy one, but there’s no deficit. Pranab Mukherjee’s budget numbers are seriously out of whack. If the fiscal deficit is a measure of the profitability of the centre’s annual P&L account, it is likely to be at least 1 percentage point higher than what was budgeted last year for 2011-12. It will be well above Rs 5,25,000 crore. Subsidies To his credit, the railway minister cut subsidies to passengers by raising fares across-the-board. He raised passenger fares by 8-33 percent after eight long years to send a message on fiscal rectitude. The Union government has been letting food, fertiliser and fuel subsidies bloat continuously for the last eight years since 2004-05, and subsidies under the three accounts could top Rs 3,25,000 crore. Pranab has to take an axe to subsidies – at least on fuel. Diesel, in particular, needs to be decontrolled. It will save the government over Rs 50,000 crore at current crude prices. There can be other parallels, but the main one is this: both Dinesh Trivedi and Pranab Mukherjee have political bosses who believe in populism and patronisation of the poor. They believe in  spending endless sums in the name of the aam aadmi without thinking about who this mythical aam aadmi is. To get out of the clutches of Mamata Banerjee’s irresponsible thinking on the railways, Trivedi had to keep her in the dark about his intentions and do what he thought was right for the railways. Pranab Mukherjee was the man who approved the Railway Budget, not Mamata Banerjee – as he himself admitted on the floor of the Lok Sabha on Thursday. Maybe, then, it is time for him to ignore what the First Family wants from the budget and work towards fiscal consolidation. Between him and Manmohan Singh, they have a chance to undo some of the damage done over the last few years of UPA rule. Mukherjee needs to do a Trivedi and think of the country before the party.