Dubbing it a major reform agenda, former railway minister D V Sadananda Gowda had said in his maiden Rail Budget that “the Railway Board, due to overlapping roles of policy formulation and implementation, has become unwieldy. Therefore, I propose to separate these two functions”. By way of follow-up action, the Railways have recently constituted an expert committee headed by Bibek Debroy to suggest reorganising and restructuring the Railway Board so that policy making and operations are separated: the policy making will focus on long-term and medium-term planning issues while operations will focus on day-to-day functioning of the organisation.
Similar views had been expressed by the Rakesh Mohan Committee in its report submitted to the government in 2001. The report stated that the current structure, wherein Indian Railways (IR) is a government department, subjects the organisation to numerous pressures that impede its functioning along commercial lines and, therefore, as long as policy making and execution are part of the same organisation, IR will find it extremely difficult to have arms-length negotiations with the government. It called for a restructuring plan to address the issue of insulating railways from political/governmental interference. Integral to this scheme of things would be the setting up of a tariff regulatory authority which can regulate IR’s activities as a monopoly supplier of rail services, particularly that related to tariff setting.
How reluctant the government was to handle this veritable hot potato was evident from the statement made by the railway minister at the time of release of this report. He unequivocally said it would not be feasible to implement reform measures recommended by the committee, including the proposed revamp of the Railway Board, in the near term. It should not surprise anyone, therefore, that the committee’s recommendation for drawing up a restructuring plan, built on the premise of separation of the twin functions of policy making and operations, has not been discussed any time thereafter.
Already, there is a large number of railway employees, right from the senior management to lower hierarchical levels, who would prefer a status quo and are extremely chary of switching over to a new organisational structure. This may partly be because of the fear of losing some of the authority and privileges they have long enjoyed, and partly to avoid the pain of transition to a new system. In fact, the National Federation of Indian Railwaymen has publicly spoken out against such a move, saying that “policy making needs to be in the hands of operational in-charges who can correctly forecast future requirement of assets, inputs and infrastructure for making the system more dynamic”.
In order, therefore, to overcome the workers’ resistance to change, and to convey to all stakeholders the seriousness of its intent, the government should prioritise the terms of reference of the newly constituted committee to ensure that the issue of separation of policy making and operations should get finalised first. Other terms of reference, such as laying down modalities for setting up the Rail Tariff Authority or suggesting an appropriate framework for raising resources, could be taken up for consideration subsequently, because how successfully the latter can be implemented will depend largely on how the committee is able to tackle the former, and the more contentious, issue.
A research paper of the World Bank has outlined three factors that have contributed to the adoption of separation, within the railway industry, of the roles of policymaking and a service provider, by several developed countries whose rail systems were studied. Firstly, there is a concern that without a separation of this kind, the commercial objectives of a rail system will come into conflict with the policies of public interest. Secondly, the professional and institutional skills necessary for formulating public policies are very much different to running a commercial enterprise. And finally, separation tends to lead to more efficient forms of service delivery.
Coming to the reorganisation of the Railway Board itself, some views can be found in the reports of previous such committees as well. For instance, the Sam Pitroda Committee Report of 2012 called for creation of separate Board members for passenger, freight, and technology and business development, in contrast to the current organisational pattern that is more cadre-based, with separate members in charge of departments such as mechanical, engineering and electrical. It had also called for scrapping the position of chairman of the Board and replacing it with a chief executive officer instead. A former railway minister had also spoken about introducing a change in the Board structure by creating posts of separate members dealing with safety, passenger amenities and freight movement. The Anil Kakodkar Committee report on rail safety had also called for similar reforms.
The restructuring of the Board is aimed at ensuring faster decision-making while maintaining objectivity in the decision making process. With this, the railways can attain higher levels of operational efficiency and profitability. The current economic situation also demands a streamlined management structure with clearer, explicitly defined responsibilities and short decision-making paths for better business results.
At the time of formation of the Restructuring Committee, one had harboured a suspicion—and not without reason, too, since several key recommendations of previous committees have continued to lie unattended—that perhaps it was only a stratagem by the government to divert public attention from the many ills of Indian Railways staring at us today: weak finances, inadequate track capacity, failing safety standards, low productivity and an excess of manpower. With the recent cabinet reshuffle some of these doubts have been dispelled, since the new minister’s reputation as an achiever has travelled ahead of him. Railways, too, now seem to be gearing itself for providing an improved level of governance and better delivery of service.
Institutional reforms and running of bullet trains have rightly been accorded a high priority to rebuild the Railways’ image. Both will be equally transformational.
The author is a former MD of Railway Finance Corporation.
E-mail: mathur.surendra@gmail.com