As the nation enters the third decade of the 21st century, the central government on Christmas Eve unleashed discontinuous disruptive reforms as the latest remedy to resuscitate the terminally ill Indian Railways (IR). History will remember Narendra Modi as the first prime minister of independent India who dared to successfully navigate the conundrum of entrenched obdurate bureaucratic cobweb and the impenetrable departmental “silos” of the corner building at Raisina Road. Biting the bullet is a task well begun. Alas! If only someone had woken up decades ago when the 156-year-old behemoth, long touted as “lifeline of the nation” first began bleeding profusely.
This article analyses the radical reforms, discusses why they were the need of the hour given the ailing status of IR for long, it diagnoses the diseases choking the railways, it dwells on why the much-delayed reforms are the “first baby steps” and finally details what more is needed to restore the railways back to health. Let me begin with the reforms unleashed.
Firstly, abolishing eight railway services organized on departmental lines (which dragged the IR in twelve different directions, making it standstill) and replacing them with a unified Indian Railway Management Service (IRMS) is the most obvious reform that shatters departmental “silos” in one go. An outsider-insider of the railways, I dare say, the IR is home to dangerous silos within silos. This reform first recommended by the Prakash Tandon Committee (1994) has taken 25 years to see the light of day.
Secondly, downsizing the railway board from the top by reducing the official members is what the doctor ordered after a substantial delegation of powers to general managers and other field officers earlier. A board whose power is now limited to the mandate of policy, strategy, monitoring and coordination with which it was first constituted in 1905 based on the Robertson Panel Report (1903) needs to be nimble and compact.
Thirdly, re-designating the chairman, railway board to include powers of a “CEO” is not only well thought out and restores back the post’s eroded authority but the decision also takes the author down memory lane to 1908 when then the British Indian government, based on recommendations of a railway finance committee, designated the railway board chairman as “president”, (with the power to overrule other members) and with the rank of secretary to Government of India, reporting directly to the viceroy.
The fourth highlight is the laudable decision to infuse fresh strategic energy, thought and action by ushering in the era of independent experts as board members. This salutary modification is central to all reforms as in the past mandarins of the railway board shot down even the sanest outside view with contempt and disdain. This self-defeating obduracy ensured that the most critically needed recommendations of key committees were never implemented. Sadly, these committees were mostly set up by the railways itself.
Finally, the railway board reorganisation along functional lines is the natural outcome of the decision to merge services. Lack of professional orientation and proliferation of members and director generals is solely attributable to the different services looking to protect their fiefdom and expand their “empire” much to the detriment of the body fabric of the railways.
The reforms unleashed are indubitably bold and transformative even though decades late. These are also in continuation with reforms by the Narendra Modi government, for instance, abolishing separate railway budget empowerment of general managers and other field officers with radical delegation of powers and allowing competitive operators to run the trains among others.
There was a crying need for these reforms. Make no mistake, the Indian Railways has been in the “ICCU” for long. Ailments hemorrhaging it are multifarious. I reproduce below just a few major illnesses afflicting the IR that made disruptive reforms inescapable.
Firstly, the IR has ceased to be the prime mover of the nation’s freight. It ceded its pole position much before quality highways and technologically advanced, nimble door-to-door road carriers hit the streets. From the predominant carrier of 80 per cent of national freight throughput in 1960, its share nosedived a decade back to 30 per cent, which has unsurprisingly plummeted today to around 25 per cent. It has fast lost high-value goods traffic, has failed to increase its freight basket and failed to transform itself as freight-aggregator. Even its traditional bread and butter, bulk commodities have started looking away from it.
Secondly, as a “people-mover”, IR today is relegated to the “also-ran” category with its share of national passenger throughput in single digits. In the 500-1,000 km range, it is fast losing to superior Volvo and Mercedes plying on much-improved highways. For long-distance passengers, low-cost air carriers long back turned nemesis of IR. In most sectors, a well-planned air journey today is performed at price equivalent to AC 3-tier train services. The net result is IR has started losing passengers in absolute terms annually as a rule and an upside in a particular year is more an anomaly and exception.
Thirdly, the Indian Railways has ceased to be “on-going concern”. Its financial performance, measured as operating ratio (OR) was 98.3 way back in 2001-02. In 2017-18, for which numbers are available, OR is 98.4. And in between the two years, OR has averaged around 95. But there is more to this story. IR finances do not depict a “true and fair picture”. Every year, OR is kept below 100 with ingenious and creative methods of opaque railway accounting.
The fourth point is the way IR creates or fails to create infrastructure. The signature east and west dedicated freight corridors are a decade behind the original deadline. The Prime Minister’s pet high-speed passenger corridor has faced uncertainties galore. In between lie hundreds of big and small projects, costing more than Rs 5,00,000 crore, stuck at various levels of construction. For instance, the construction of the Haridaspur-Paradip freight line project is telling. This author once perused the concerned railway board file where the first letter requesting the line was from Biju Patnaik as Odisha chief minister. Decades have gone by, and now even his son Naveen Patnaik has completed five terms as chief minister. The project was sanctioned in 1996-97, its foundation stone laid by railways minister Nitish Kumar on April 4, 1999, construction work was handed to Rail Vikas Nigam Limited (RVNL) in 2002, but the 82-km line despite being constructed in special purpose vehicle (SPV) mode, is likely to get completed only next year.
The author congratulates and compliments the government for the reforms brought in. It is instructive to note that the government has not reinvented the wheel, and rather has thoughtfully dug into the wisdom of recommendations of numerous committees gathering dust for decades in the railways.
There are twin challenges before the government now. The first is of seamless implementation. In the famous words of the Dr Anil Kakodkar Committee, IR suffers from the “implementation bug”. To make reforms a success, calibrated “implementation task forces are needed” to complete both wholesale and retail implementation within governments. The much-touted “merger of cadres, seniority fixing and even reforming railway board down to section officer level” is less daunting. More onerous is the task of dismantling the departmental silos and making them functional and market oriented at zonal, divisional, sub- divisional and station levels. IR has so far gloated in ensuring the non-implementation of reforms. It will test the full might of the union government to make reforms work.
The second challenge is even bigger. It is also needed extremely urgently. This is modularly unleashing the next wave of reforms. It will do good for the government to set up another task force, whose only job is to study all the reports languishing in the railway board and bring out implementable reforms from that in a three-month period. It is doable: this author as the only other member of the Dr E Sreedharan Committee found pearls of wisdom after reading and internalising more than 60,000 pages of such reports in less than three months. This fact is recorded in the Sreedharan Committee report which, along with the Bibek Debroy Committee report, are the only two exceptions that have been implemented.
Let me briefly recount the unfinished agenda of reforms that must be modularly implemented. First is the unfinished agenda of current wave of reforms.
One, the Railway Protection Force (RPF) should be carved out as a separate paramilitary force. Its services should be provided to IR, and be fee-based. Already a model exists for the CISF providing fee-based services at airports and many other government establishments. Also, there is a case for the home ministry bearing the full or part cost for security. The railways can be and must be forced to provide safe services, but they have no control on the security situation prevailing in the nation.
Two, IR should be liberated at once from its medical extension. Medical services officers at more than 5,000 are simply the largest pool of IR officers. IR’s own hospitals came in a different era, have served their purpose and their marginal utility has substantially gone down. Persisting with them will cause grievous injury to the financial health of IR. The medical wings should be grouped as regional entities and simply sold off. As far as meeting the medical cost of the railways' men and women are concerned, a well-designed group medical insurance will be a much better and cheaper solution.
Three, the government has done well by bringing production units under one corporatized umbrella. There is more action needed on this front. They again came in a different era and have served their original purpose. Persisting with them will be self-defeating and keep IR in the vicious cycle of technology of the past. Today, no bus-operating company manufactures buses. Nor does an airline manufacture planes. A lesson should be learnt from the Metro Rail Systems developing fast in the country. State-of-the-art Metro coaches or other technical items are bought items and not made items. Even then, today “Make in India” modern metro coaches are exploring foreign markets. All the existing IR production units should be divested one by one either through IPO or strategic sale to the global best.
Four, the government has rightfully started reducing its stake in listed railway PSUs. There is a strong case to bring down the stake to first 50 per cent (like it was done for Maruti) and then to 26 per cent; or alternately IR should exit them lock, stock, and barrel.
There are more reforms, some in the form of low-hanging fruits and others more daunting that should be the “next level” of reforms to be taken up modularly.
First, as a starting point, all sub-divisional offices should be shut. They serve no concrete functions. Some divisions have more than one.
Two, with cadres, merged, there is an urgent need of a complete overhaul of the railways training ethos. There is a case for either leasing out or selling all the departmental training centres to hospitality companies. In the last few decades, nine railway services (including RPF) had internecine competition to have their own state-of-the-art residential training campuses. What IR needs today is two pan-India centers (like NAIR Vadodara) and a proliferation of new-age staff- training centers, to managerially reorient and technically hone up skills of IR staff (twelve lakh of them). The 21st century IR cannot be run by 19th century manpower.
Last and most important, it is time for a hard look at the existing IR zonal railways and divisional systems. On August 15, 1947 India started with six zones and a substantially smaller number of divisions than today. These six zones also subsumed many smaller railways, princely state railways and private railways. Today, the country has 17 zones (a new one for Andhra Pradesh will be the 18th) subdivided into 73 divisions. Even a casual observer of IR can tell the proliferation of zones and divisions were acts of political expediency which became boundaryless during the “coalition era” at the Centre when IR was handed over as “dahej” to the most recalcitrant alliance partner. None of the zones or divisions were created to usher in operational and managerial efficiency.
There is a need to reduce the number of zones and divisions strictly based on operational, managerial and business needs. And time is running out. The author leaves it as food for thought for the government as to how to usher in this most pressing reform. For the moment, the author ends this piece with what he said in Forbes Magazine in August 2010 in a piece titled Reviving Indian Railways: "Business as usual will not work for Indian Railways any longer…. If the Railways in India were to stitch together three or four administrative zones into a joint stock company each, they would be able to plan and execute projects at a faster pace. And they can easily unlock a value upwards of Rs. 1 lakh crore if they were to launch IPOs". The same article also asked for conversion of the railway board into a holding company.
(The author, an ex-railway official, is a railway expert. Views are personal)