Railways Must Regain Glory

The railways must work like a corporate organisation, capable of generating internal accruals

Published: 08th July 2014 06:00 AM  |   Last Updated: 08th July 2014 12:52 AM   |  A+A-

Just three weeks before the presentation of the railway budget, the Narendra Modi government earned the wrath of the people by increasing the rail fares by 14.2 per cent and freight rates by 6.5 per cent. The decision was followed by a not-so-unusual-politically-motivated rollback, though restricted to suburban rail passengers travelling in second class for a distance of up to 80km.

Worse, the government disowned its decision and passed the buck to the UPA government, whose decision it claimed to have implemented. For one thing, it burst the myth that the government is in for tough decisions with a die-hard attitude towards reforms. The government should not have adopted this approach of self-defeat and lack of self-determination.

It is pertinent to mention that this was the third hike during the last 15 years, a period when inflation rate touched a record high. Everything from food to fuel had become dearer, except the railway ticket. Small wonder that the Indian Railways is not in the pink of health. The nation’s lifeline has been gasping for breath. How can the country expect the railways to meet the needs of the 21st century India?

The world’s fourth largest rail network, with 11,000 trains running daily carrying 30 million passengers, has earned the dubious distinction of having the largest number of delayed projects as far as infrastructure is concerned with a cost overrun of over 120 per cent. Some projects, approved way back in the 50s, are still incomplete and ones like the Dedicated Freight Corridor and modernisation of stations are behind schedule.

It won’t be wrong to say that India still moves on the legacy left by the British, as it could lay only 13,000km of rail tracks since Independence. China, which was far behind India when the communists came to power, laid 91,000km of tracks during the same period. It extended its vast network even to Tibet. The Qinghai-Tibet railway connects the rest of the country with “the roof of the world”—Lhasa. In comparison, Indian Railways has failed to bring the border areas in Kashmir and the Northeast on the rail network.

Poor infrastructure, lack of safety measures and basic amenities and stagnant capacity have reduced the railways’ popularity. Forget Union and state ministers, even municipal councillors do not use the railways. People who run the railways have many choices but the ordinary man has to bear with the archaic, feudal and overburdened railways. Glories of the railways are a thing of the past, like the puffing demons as the steam engines were called.

A FICCI report on implementation of infrastructure projects says that India has fallen short of its targets in all sectors during the last decade. The quality of rail infrastructure is below par as far as productivity, average speed, cleanliness of stations and even sanitation are concerned.

Every year 15,000 people are killed in rail accidents. Apart from the infrastructural loss in such accidents, the railways also pays compensation to the aggrieved. A report in a leading daily said the railways could not buy insurance cover in 2009 due to high insurance cost. Companies were reluctant to provide cover in view of the high rate of accidents, though the cost of ex-gratia payment and compensation the railways incurred far exceeded the insurance cost.

The rail budget is a litany of announcements about new trains, addition of wagons and coaches and promises to boost infrastructure. Needless to say, promises never materialise. New trains are announced according to the whims and fancies of the minister and are added to the already overcrowded tracks.

Passenger fares are seldom increased and are cross-subsidised with an increase in freight rates. As the FICCI report says, “The railways has been losing its share in passenger and freight traffic to road transport consistently. The share of passenger movement by rail has declined from 74 per cent in the 1950s to the present levels of 13 per cent, and the share of freight movement by rail has dropped from 86 per cent to 39 per cent. This can be partly attributed to the improvement in road infrastructure, but mainly to the dwindling quality of rail services.”

The provisional figures for 2013-14 suggest the railways was able to earn more revenue, compared to the previous year. However, the operating ratio—proportion of expenses to revenue—has deteriorated further to 90.8 per cent in 2013-14 from 90.2 per cent. A surplus in such a situation is like asking for the moon. Yet, it distributes dividend! The interim budget for 2014-15 reveals 30 per cent of the budgetary allocation goes into distributing dividend. And it is a whopping `43,000 crore during the last five years!

Alas, the reforms suggested by various committees. No one in the government even cared to think of a single suggestion in their reports, forget implementation. It is time the Modi government thought of reforming and restructuring the monolithic organisation that the railways is. It should not be treated as the personal fiefdom of the rail minister. The government must change the way infrastructural development is viewed. Undue delay in completing projects adds to fiscal deficit and stagnates economic growth. The possibility of public-private partnerships must be explored to avoid project delays and for project financing. Instead of announcing a slew of trains, budgetary allocation for safety measures must be raised. Installation of GPS devices on-board trains can be one way of minimising accidents. It is time to overhaul the organisation and modernise and boost infrastructure.

The limited resources are being stretched too far to cover dozens of projects. A balance should be struck in passenger fare and freight rates. Ideally, an independent railway tariff advisory authority should be formed. Mamata Banerjee proposed to form such an authority but the proposal was not pursued by successive ministers.

The railways is essentially a passenger carrier service. But the same tracks are used for freight carriages resulting in more wear and tear, delay in delivery and low productivity. Timely completion of the diamond quadrilateral project shall help in the fast movement of goods, reduction in operating costs and improvement in productivity. Higher freight rates are not considered viable, as they contribute to inflation.

The railways must work like a corporate organisation, capable of generating internal accruals not only to meet costs but also for modernisation and expansion. A populist budget indulging in self-praise and promising a sea change may receive applause from a few in the short run but will not win a million hearts in the long run.

The author is a company secretary and can be reached at jassi.rai@gmail.com

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