Indian Railways On & Off the Track~II: A Review by Raghu Dayal, Senior Fellow/AITD & former CMD/CONCOR

Raghu Dayal is former Chairman of CONCOR and Senior fellow, Asian Institute of Transport Development.

The Railways have been dithering for the past three years. The resources that were required were in no way forbidding. Pending the introduction of up to 200 km/h ‘semi high speed’ DelhiMumbai and Delhi-Kolkata Rajdhanis immediately on commissioning of the freight corridors, selected routes such as the 500 km Chennai-Bengaluru-Mysore route and the 1,400 km Delhi-Mumbai corridor, recommended by the Japanese, could well have been introduced by now at a speed of up to160 km/h (like the Gatimaan on 200 km DelhiAgra route).

As regards speed enhancement, the style of operations has been baffling. The Railways opted for detailed studies for constructing exclusive corridors for up to 350 km/h high speed rail (HSR) for “bullet” trains, on its long-distance arterial routes. The project is prima facie ill-conceived. Seven “bullet train” corridors have been identified and feasibility studies completed. Only one ~ the 500 km Mumbai-Ahmadabad route ~ has been given the go-ahead after Japan agreed to provide a $12 billion loan.

Also to be examined is the severe impact of passenger cross-subsidisation. Newer strategies need to be devised for passenger business. In 2015-16, the Railways incurred a loss of Rs 487 for running a passenger train over a distance of one kilometre. The train, as an iconic symbol, traverses a facile and perilous route ~ often hiking freight charges and upper class, mostly AC, passenger fares. By cross-subsidising passenger business, the Railways have out-priced itself in the freight sector, thus tending to kill the goose that lays the golden egg.

With low-cost air carriers flying high, it must refrain from raising AC train fares. As it is, upper class segment aggregates just 145 million journeys in a year, only 1.8 per cent of overall travel, but contributes more than 31 per cent (Rs 13,756 crore, in 2015-16) of total passenger earnings. The ordinary second class segment is largely responsible for the fiscal mess.

The ordinary class II ticket costs 20 paise per km, which is less than one-third of the bus fare. Terminal congestion has emerged as a major constraint towards running a larger number of train services. Many of the freight terminals in the metropolitan areas have been squeezed out by passenger expansion, while those that remain face stringent restrictions on the movement of heavy road vehicles.

Out of the 1,300 terminals managed by the Railways, only 500 handle more than 10 trains per month. These should really be served by at least one train a day. There are also some private sidings which could be better utilised as common facility terminals. In addition to some 15- 18 integrated logistics centres, 10-12 large stations need to put in place modern maintenance facilities, pending which a few existing terminals serving metropolitan towns need to be urgently improvised through the redevelopment of stations.

The Railways need to explore the immense possibilities of identifying stations ideally located near places of pilgrimage and archaeological interest. This can be done in cooperation with the state government. It is imperative to cut costs. Transport charges have declined the world over. The Indian Railways must bring down its freight charges. Competitiveness is low because of high transaction costs. The paradox is striking.

The Railway ministry invests in new technologies and persists with old staffing patterns. Several services and activities are outsourced, but there has been little or no reduction in the strength of permanent cadres. Multi-skilling is a mere a slogan. It is headed towards a demographic nightmare ~ its 1.434m pensioners (accounting for 34 per cent of working expenses) now exceed 1.325 working employees. Before long, salaries and pensions will swallow three-fourth of its budget in terms of working expenses.

The Railways must first shed its perceived role of a departmental undertaking with public service obligation and, instead, perform as a corporate entity with inalienable responsibility to carry the nation’s freight and passengers adequately, efficiently and economically. There are ministries and programmes to look after social obligations, for which they have their own budgets. A rigid bureaucratic structure flies in the face of business ethos.

The network in Russia, China, Germany, France, Britain, are now autonomous corporate entities, having shed their garb of government departments. In India, it has rather stubbornly stuck to its departmental character, inevitably perpetrating bureaucratic rigidities and wallowing in competitive frailties of babu culture.

The management structure has been compartmentalised, and this has created departmental fiefs, rendering the system perilously obese and extortionist. Functional requirement must perforce be the overriding consideration in determining the apex management pyramid. The primary function must be production, marketing and operation of transport services.

The top management posts require the incumbents to provide meaningful leadership to thousands of workers and managers in different disciplines. Like general command posts in the armed forces (Brigade, Division, Corps, or Army) held only by specially selected and trained officers mostly from the fighting arms, The general administration posts in the Railways, such as the Divisional and Zonal chiefs, need to be manned only by those who are duly exposed to 24X7 rigours of operations, maintaining interaction with customers.

IR has made a welcome, though as yet a half-hearted beginning, towards functional integration by designating three Members of the Board – for Traction, Rolling Stock and Infrastructure.. For the present, Board’s composition could be a Member each for (i) Freight logistics services, (ii) Passenger business, (iii) Infrastructure (tracks, bridges, land, buildings, signalling, electrification, (iv) Dynamic Assets or Rolling Stock and equipment, (v) HRD, including industrial relations, vigilance, safety and security, (vi) Finance, including accounts and material management, and (vii) Chairman as the CEO for coordination and control, strategic planning, R&D.

Minister Piyush Goyal needs to deftly, and firmly, handle matters in the Kafkaesque Rail Bhawan, then right across the sprawling system ~ its vast web of installations ~ some 45 workshops for POH, 100 loco sheds, 260 repair depots and ‘sick lines’, stations and yards, colonies and offices, its 65,000 strong protection force. It’s not railways’ business to run schools, hospitals, or kitchens, printing presses or garment stitching. Some “empires” contrive to survive, for example, the mammoth 23,325 strong construction organisation, its over-6,000 “work-charged” officers’ posts unduly continuing, not without complicity of Finance.

There have been too many routine and mundane functions taken up by the Board/Ministry, with some 140 Joint Secretary-and-above level incumbents crowding in Rail Bhawan. It needs to ruthlessly prune the number of officers and staff in the Board, to begin with, to at least half. The Bibek Debroy Committee noted that “IR’s efficiency was better with 9 zones than with 16”. Today, given the emphasis on IT enabled flat management structures facilitating quick decision making and efficient delivery, it would be prudent to streamline the traditional 4-tiered organisation into a 3-tiered system.

The Railways can thereafter re-draw the geographical areas of the 16 zonal administrations, even increasing their number to, say, 22-25. A small beginning has been made for posting junior administrative officers at some major stations. All large station complexes, major freight depots and centres, maintenance workshops may be endowed with local area managers selected by a special body, if not UPSC, from the general administrative pool with delegated authority over all functionaries and disciplines.

In due course of time, these managers will constitute the bulwark of administrative resource for the organisation. If duly nurtured and wisely led, the Indian Railways will bounce back, like China Rail. The latter had lagged far behind its Indian counterpart. In just 25 years, it has gone far ahead of the laggard and has emerged as the world’s numero uno.