The former Railway Minister Sh. Lalu Prasad compared the Indian Railways to a Jersey Cow, which has not been milked. He later claimed to have milked it enough. With a change of alliance, the vision of UPA seems to have changed. The new Minister now promises a White Paper on the financial status of the Railways during the past five years. The earlier Minister credited himself with the turn around entitling him to lecture at the Harvard University. Putting all railway management principles upside down, the present Minister could well author “what they don’t teach you at the Harvard Management School”.
1. Digression into Non-Core areas
The principal object of the Railways is to transport freight and passengers and connecting the whole country. It must ensure safety and comfort. This must be available at reasonable prices. The Minister has raised the issue of the split personality of the Railways through a debate on Economic Viability Vs. Social Viability. The social purpose of the Railways can be achieved only if the Railways are economically viable. A bankrupt Railways can hardly underwrite its social responsibility. One is not an alternative to the other. What Railways has to be saved from is neither the principles of economic viability nor the desire for social viability but from political grandstanding wherein the areas of the core competence and responsibility of Railways are ignored and the Railways digresses itself into non-core areas. This is precisely what the present Budget seeks to do.
The non-core areas into which the Budget endeavours to achieve are:
- Construction of multi-functional complexes including malls and restaurants – Railway as a realtor (Page 4).
- Construction of Budget Hotels – Railways as a hotelier (Page 4).
- Construction of indoor stadia in various divisions including Indo-Bangladesh Border (Page 11).
- Construction of 7 nursing colleges (Page 11).
- Establishment of 17 medical colleges (Page 11).
- Laying down of optic fibre network throughout the country (Page 13).
- Establishment and improvement of printing presses in Mumbai, Delhi, Kolkata and Chennai (Page 14).
- Commercial structures at surplus land of printing presses (Page 14).
- Takeover of Basumati Sahitya Mandir, a PSU from the West Bengal State Government (Page 14).
- Establishment of a 1000 MW power plant in a tribal area (Page 18).
- Establishment of training institutions for young artisans and supervisors (Page 18).
The fundamental principle of any efficient management is to concentrate on its core area of competence and ignore all non-essential and non-core activities. If any of these activities are required, they can be outsourced. Railways’ getting into areas which do not fall within the domain of Ministry of Railways under the Allocation of Business Rules, is not merely retrograde and detrimental to the interest of the Railways but against all efficiency norms.
2. Does the Railway Budget reflect the true and honest picture of the Railway accounts?
(a) The country has always expected the Railway Minister to be candid with the real state of Railway accounts. It is generally felt that the true picture of the Railway accounts has been concealed and camouflaged. There are three statements in the Railway Budget which seemed to be indicating this:
- “I was surprised to find that there was a provision of Rs. 3,400/- crores for Railways mobilization through PPP of which Rs.3,300/- crores would just not materialize.” – (Page 28).
- “Based on the review, it is clear that the unrealistic high target set by the interim budget are not sustainable and warrant a mid-course correction.” – (Page 19).
- “I would like to assure the House that the Railways will come out with a White Paper indicating its present organizational, operational and financial status based on its performance in the last 5 years…” – (Page 37).
(b) As though this was not enough, the Mint Newspaper dt. 06.07.09 has reported that the Railway Minister’s speech was changed in the last minute. The original text was put on the website and then hurriedly withdrawn and replaced with a corrected text. As against a claim of Railways having a cash surplus, the withdrawn text stated
“To fund our massive network expansion programme, completion of capacity enhancement works and timely replacement of over aged assets, the planned expenditure has been sustained in 2 years i.e. 2008-09 and 2009-10 through draw-down from our accumulated fund balances, which may not be possible in the future…”
(c) There has been a jugglery in the maintenance of the Railways Accounts.
From 2005 onwards, in respect of lease charges payable to Indian Railway Financial Corporation, which has leased rolling assets to the Railways, the accounting system was changed by bifurcating the lease charges payable into a revenue and capital component and removing the capital component from the working expenses thereby inflating the cash surplus and the profit figures to the tune of Rs.1,608/- crores in 2007-08, Rs.1,810/- crores in 2008-09 and Rs.2,209/- crores in 2009-10. It is not clear how this can be done when these so-called capital charges are actually for payment towards hiring of rolling stock and should therefore, form part of working expenses. It is not a capital charge. This has been adversely commented upon by the CAG.
3. Has the nation been misled that there has been no hike in passenger fares from 2004 to 2009?
The Parliament and the country were repeatedly misled that there has been no hike in passenger fares between 2004 and 2009. This statement is clearly false. As is evident from under:
(a) During the period 2004-2008, the nomenclature of 374 trains was changed to “Superfast” without effectively increasing their speed beyond 55 Kms. Per hour and a charge of Rs.8 to Rs.15/- was imposed on each ticket.
(b) An extra reservation surcharge was imposed if the ticketing station was not the station from where the journey had to commence. Thus, if a Chennai – Delhi – Chennai reservation was booked from Chennai, the Delhi-Chennai segment would be charged extra since the ticketing was from a station other than one where the journey was to commence. This charge was Rs.15/- upwards.
(c) The Tatkal Scheme is an exploitation of the Railway’s monopolistic character. An artificial shortage of tickets is created by reserving 30% and more tickets under the Tatkal Scheme and not issuing them to the passengers till the last few days. Thereafter, these tickets are sold on a surcharge of Rs.150/- for Sleeper (now reduced to Rs.100) and Rs.300/- for A.C. This is a monopolistic and anti-trust practice which would be treated as illegal even against a monopolistic service provider anywhere in the world. The CAG has adversely commented on this by stating:
“However, various components of passenger fare other than basic fare such as reservation charges, superfast charges, cancellation charges, clerkage charges etc. were revised.”
4. Do Railway Ministers make announcements and forget about them?
The two major announcements made by the Railway Minister this year related to the user of Railway land by setting up of optic fibre network in the country and establishment of world class railway stations in India. A review of some of the earlier Railway Budgets in this regard is as under:
| 2000-01 |
Ms. Mamta Bannerji presented the NDA’s Railway Budget where she wanted to usher an IT revolution through a optic fibre network in the country.
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| 2001-02 |
Ms. Mamta Bannerji presented her second budget where she earmarked Rs.750/- crores for setting up of optic fibre network in the country.
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| 2004-05 |
Sh. Lalu Prasad’s first budget promise – modernization of 1,100 stations.
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| 2005-06 |
Sh. Lalu Prasad second budget promise – an optic fibre network being laid on railway land and modernization of railway stations in India.
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| 2006-07 |
Modernisation of 300 station promised over next two years.
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| 2007-08 |
Modernisation of 225 stations to be completed by March 2007.
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The present budget again promises to set up an optic fibre network in the country and create 50 world class stations and 375Adarsh stations.
The fact, however, is that not a single railway station in the country has been modernized. The modernization of railway stations is promised through a Public Private Partnership. The first tender for such modernization was brought for the New Delhi Railway Station, which has 253 acres of prime land adjacent to Connaught Place. Not a single bid has been received for this modernization programme.
5. The big picture of Indian Railways
The British ignored the roadways but concentrated heavily on the Railways. Indian Railways was created during the British Rule. It is regrettable that when the British left India, between then and now, very little improvement has been made in the Railway infrastructure.
- The track length when the British left India was 55,596 Kms. Today, it is only 63,940 Kms. In the last 10 years, only 250 Kms. have been added.
- The number of locomotives, between British India and now, have increased from 8,209 to 8,330, of course, with an enhanced capacity.
- The number of passenger coaches have increased from 13,109 to 40,734.
- The number of wagons have actually declined from 2,05,596 to 2,04,034.
It is clear that Indian Railways has not concentrated on infrastructure creation.
The only Railway Safety Programme was launched during the NDA Government headed by Sh. Atal Bihari Vajpayee when Sh. Nitish Kumar was the Railway Minister. Rs.17,000/- crores was earmarked as a Special Railway Safety Fund for upgradation of over aged railway assets. This resulted in the over all strengthening of the railway infrastructure and reduction of accidents. In fact, the operating ratio of the railways was 91% when the NDA exited from power. Today, it is projected at 92.5%.
The methodology used during the UPA Government from 2004 to 2009 by overloading the wagons with an extra load was possible only on account of the fact that Special Railway Safety Fund had been effectively utilized to strengthen the railway track and upgrade the signals all over the country.
6. Will Railways be an enjoyable experience as claimed by the Prime Minister?
We only need to ask ourselves a question whether the environment at stations and in trains is better than what it was a few decades ago. Our stations are crowded, the food is sub-standard, the hygiene and cleanliness standards are inadequate, the waiting rooms need huge improvement, the toilets are dirty and unsuable. The architectural designs of the railway stations is faulty. The passenger normally enters the station on the first or the last platform. He has to travel to over platforms by climbing up the stairs and climbing down. This design has been rejected globally. World over the railway stations enable the passenger to enter at a point where all platforms are horizontal to his entry. He can avoid climbing up and climbing down. The stairs make the job of a porter extremely difficult.
The quality of food, cleanliness of compartments, toilets, linen in the trains itself is inadequate. How do you then make railways an enjoyable experience? Has time come to seriously consider delinking the essential components of railway functioning. Let the operations be with the Railways and the functions of hospitality be outsourced. A pilot project in this regard has already been launched and therefore, its results should be shared with the nation and a debate initiated in this direction.
7. The Railway economy
The fundamental principle of railway economy is that passenger fair is subsidized by the freight earnings. The freight earnings cannot be unreasonably high as the same has the Road as a competitor. The pricing of freight has to be market driven and competitive. The Railways therefore, must earn adequately from the freight and subsidize the passenger fare.
The second principle of the railway functioning is that in the operation of a train, the fixed cost do not alter at all depending upon the size of the train. Thus, whether a train has 14 wagons / coaches or 28 wagons / coaches, the fixed cost are broadly the same. The staff expenditure, the locomotive expenditure, the expenditure on the track, stations does not alter significantly. Thus, the basic principles of efficiency is that existing assets should be utilized to the optimum. The turnarounds of the train should be faster, the length of the train should be commercially viable and the loading should be higher. Faster, Longer and Heavier is the key to success. This has been possible only because of the Rs.17,000/- Special Railway Safety Fund sanctioned by the NDA Government.
Internationally, with stations, tracks, signaling and safety being a Government prerogative, these assets have been used for promoting a Public Private Partnership and allowing intercity trains and specific route trains additionally to the private sector. Competition will promote quality and the Consumer will benefit.
Has time come in India to discuss this?
इस अनुभाग के लिए वर्तमान में कोई सक्रिय रिकॉर्ड उपलब्ध नहीं है।
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