Land banks: How Indian Railways can help spur growth

In a couple of hours from now, Pawan Kumar Bansal will present the Railway Budget.

Traditionally, politicians have used Railway Budgets to give away doles for their respective states and constituencies.

Will Bansal be different? If he indeed turns out to be, how much of a difference can he make?

For one, Bansal had the courage to increase passenger fares, which has always been a political bone of contention.

Bansal is under pressure to further increase passenger fares, at least in a small way, and revise freight rate in the wake of virtual decontrol of diesel price.

[caption id=“attachment_639556” align=“alignleft” width=“380”] Bansal is under pressure to further increase passenger fares, at least in a small way, and revise freight rate in the wake of virtual decontrol of diesel price.[/caption]

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If he bites the bullet again by increasing fares and freight rates further, it is nothing exceptional. He is just doing something that was long overdue.

The Indian Railways is the largest employer in the world. It has more than 100,000 km of tracks, more than 7,000 stations, runs about 10,000 trains daily and carry millions of passengers daily.

Statistics shows it has the potential to spur growth in an economy, where dangers of slowdown are clear and present. But for this, Bansal has to do some unconventional thinking.

One way would be to utilise the land bank it has. In a pre-Budget interview, YES Bank chief economist Shubhada Rao had told _Firstpos_t that this is one way the government can reduce its fiscal deficit as well.

The huge land banks with railways could be monetised, perhaps with a lease arrangement for setting up plants or green field projects or projects that have linkages with railways themselves, she had said in the interview.

Considering the huge tracts of land the railways owns, monetising this would essentially mean boosting infrastructure growth.

Economists have noted that the only way for the government to revive economic growth is by increasing investment in infrastructure. And the government can do it through railways.

If Bansal does it in this Budget, that will be exceptional.

But given the situation now, this could be a bit of a wishful thinking.