Restructure Indian Railways

Restructure Indian Railways :After taking over as the new minister of railways, Suresh Prabhu announced that his priorities are customer service and safety. Fine. But, what is the composition of the existing Railway Board, the top-most decision making body of Indian Railways? Apart from the Railway Board chairman, there are six members—member (electrical), member (engineering), member (traffic), member (staff), member (mechanical) and financial commissioner.

Is there anyone for customer service? Is there anyone for safety? Many committees and experts have advised for more than a decade now to restructure the Railway Board to cater to the business segments of Railways but nothing changed in its restructuring. Without restructuring and bringing new faces from outside, Indian Railways’ vision of being a run-of-the-mill transporter may not change. The first task before Prabhu is to restructure the Railway Board so as to make Indian Railways a competitive organisation in the transport sector.

Railways want to bring in more private investment into its infrastructure. How can the Board of Indian Railways do the role of concessionaire, authority and regulator without conflict of interests? No one knows the need for an independent authority and regulator better than Prabhu who brought regulatory authority to the power sector during his previous stint as a Union minister. The second task for him is to create an independent regulator for the railways.

Group A and B officers are not just employees of government department but are considered to be change agents. Indian Railways hardly realised its potential with 15,000 Groups A and B officers on the payroll. No other ministry has these many Group A and B officers on its payroll as much as the ministry of railways has. In addition, there are seven secretary-level officers representing the Railway Board. The only other ministry that has three secretary-level offices is the ministry of finance. Had any other transport organisation been with such a stupendous level of highly paid, competent (at least at the time of entry) officers, they would have captured the major share of transport market long back and improved it further. The paradox is that with such a massive top-notch executives, the railways have been losing its market share year after year. As per the 12th Five-year Plan report and Indian Railways Summary Report, the market share of Indian Railways in the passenger transport segment plummeted to 12 per cent. The railways lost a major share of their passenger and freight segment to road without any remedial action for decades. The third task for the new minister is to make Group A and B officers part of the reforms process so that they become part of the solution and not part of the problem.

The Performance Measurement System which was introduced in 2009 with Result Framework Document remained an academic exercise even after five years. With such a wonderful tool at hand, Indian Railways may carry out a carrot and stick policy, and thereby improve its overall performance by rewarding performers and showing doors to non-performers. This should be the fourth task for the minister.

Although the Rail Tariff Authority is being constituted, it has to be given more teeth. When diesel can be delinked from government pricing, delinking rail tariff from the ministry of railways is a matter of enforcement. This would improve the finances of Indian Railways at least in the short run. Former railway minister V Sadananda Gowda told in his budget speech that Indian Railways requires `5 lakh crore to complete ongoing projects. The new minister should put all the projects that were announced for the sake of political compulsions on the backburner. With the additional revenues that come from tariff correction, projects which are commercially viable and which incurred huge sunk costs may be completed on priority basis and this would in turn increase revenues for Indian Railways. This may be his fifth task.

The existing rail management may find it difficult to allow private players to build, operate and own the additional infrastructure for a specific period under the BOT (build-operate-transfer) scheme on routes under the maintenance and operation of the railways. For, it is understandable that demarcating responsibility for the concessionaire, who is allowed to develop the second line in a route on BOT model where the railways is maintaining the first line, is difficult for all practical reasons. But, there are many Greenfield projects that can be developed and maintained by private players on BOT model where the railways have never been in operation. On many routes Greenfield rail infrastructure development (amounting to tens of thousands of kilometres of routes all over India) is pending for decades for lack of allocation of funds by the railways, much to the frustration of the people. The sixth task for the railway minister is to cherry-pick at least some Greenfield projects that are commercially viable and attract private players without providing viability gap funding and award it on BOT model, thereby initiating public-private partnership in the infrastructure development of conventional rail systems.

Before the parliamentary elections, Narendra Modi asked in a meeting that when private buses could ply Indian roads, when private airlines can fly on Indian skies, why not private trains run on the railway network. This is the kind of big bang reforms that Modi as prime minister expects from Indian Railways and not incremental reforms. Moreover, increase in the share of railways in passenger and freight traffic would reduce energy intensity, oil dependency, and emissions and accidents on roads.

Umpteen reports have been submitted by various committees on the improvement of the railways since Rakesh Mohan submitted the Indian Railways Report on Policy Imperatives for Reinvention and Growth in 2001. The recommended reforms remain on paper for more than a decade. The people would accept bitter pills in the first two years of governance, provided they get palpable benefits in the next three years. This is the model which Modi practised to perfection in Gujarat in the last 10 years of his stewardship. It is time to push reforms aggressively in Indian Railways. The railways have remained untouched with most of the reforms in the last 20 years. At least now, let economic sense prevail upon political expediency in the Indian Railways under the direction of Suresh Prabhu.


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