Restructuring brings difficulties for Indian Railways

The promises of capacity building and efficiency enhancement through a structural reform, the results of the transformation plan have yet to materialise

Indian Railways’ current challenges are largely seen as the outcome of the failure by political leaders and rail managers to plan or execute ideas to their logical conclusion

“Using the Covid-19 situation to continue the ban reveals a defeatist attitude and contains long term and adverse consequences” -R. R. Jaruhar

“Indian Railway talks about the need to open up, but rail bureaucracy remains unwilling to give up the monopolistic mindset” -Subodh Jain

WITH Indian Railways rapidly running out of funds to meet expenses due to the effects of the Covid-19 pandemic, the Ministry of Railways was forced to solicit additional funds from finance minister, Ms Nirmala Sitaraman, to help to pay this year’s pension bills.

Indian Railways has 1.27 million employees to run 22,678 passenger and freight trains on its 67,415km network, making it the country’s biggest employer.

In 2018-19, Indian Railways’ payroll was a whopping Rs 1,343.6 billion (US$ 18.25 billion) an increase of Rs 56.49 billion over the previous year.

Salaries and pensions account for approximately half of operating costs, while fuel bills make up 40%.

This means limited funds are available for modernisation and development works.

Freight revenue has continued to be used to cross-subsidise the passenger business.

Indian Railways reportedly spent Rs 505.79 billion to meet its social service obligations such as providing concessionary fares and running uneconomic branch lines and suburban services, as railways minister, Piyush Goyal, informed parliament in February last year.

The urgency of Indian Railways’ rail managers to take bold reform measures – such as the decision in December 2019 to merge the eight existing cadres into a single Indian Railways management service and cut the Railways Board from eight to four members, is understandable.

Last year, Indian Railways’ chairman and CEO, Vinod Kumar Yadav, held out the promise of “capacity building and efficiency enhancement” through a structural reform plan. However, the results of the transformation plan have yet to materialise.

Indian Railways’ current challenges are largely seen as the outcome of the failure by political leaders and rail managers to plan or execute ideas to their logical conclusion.

The streamlining of Railway Board and management was aimed at breaking down silos and unencumbered unwieldy rail bureaucracy.

Issues relating to future recruitment and the chain of command remain unclear.

Niti Aayog, the Indian government’s think tank, has questioned the ministry’s earlier decision to entrust the 17 Zonal Railways’ General Managers with administrative and financial powers on a par with Railway Board members.

Rather than giving the decision a green signal on a piece-meal basis, Niti Aayog, in a recent letter to the Railway Board, has sought clarity about the complete restructuring plan.

Meanwhile, several top positions, including those of Board member, rolling stock, and additional members, have remained vacant.

“Officers are highly demoralised and apprehensive about future prospects because of the arbitrariness with which the reform measures are being pushed through,” a senior ministry official said on condition of anonymity.

“In such a climate, it is only logical to assume that big-ticket plans will be put off by some years,” says former Member, Rolling Stock, Railway Board, Rajesh Agarwal.

Such assumptions are not off the mark. Highly publicised projects such as the Mumbai-Ahmedabad high-speed project, station redevelopment schemes, and the Dedicated Freight Corridors, have remained on pause in recent months, while production of coaches and locomotives has been slashed, as passenger services have remained suspended since 23rd March, 2020, with just a handful of premium-fare trains allowed to run during the Covid-19 pandemic.

The private train initiative has been embroiled in disagreements between the Railway Board and private train operators on the proposed terms of the contract.

And, after three rounds of tenders were floated, it has also been one step forward and two steps back regarding the plan for the import/indigenous manufacture of 160 kmph passenger trains.

No clarity

Four years since the electrification plan was conceived, there is still no clarity on how to monetise the 4000 strong fleet of diesel locomotives that have been displaced before the end of their working life.

The value of the redundant locomotives has been assessed at around Rs 200 billion.

In addition, Indian Railways is bound by a contractual agreement to induct 100 diesel locomotives annually over 10 years from the GE/Wabtec plant set up in 2016 at Marhaura in Bihar.

“We have delivered 230 locomotives [comprising 209 3356kW and 21 4474kW] to Indian Railways and are confident of meeting targets in coming years as well,” says Sandeep Singh from Wabtec India.

He added that approximately 15% of Indian Railways’ network would remain diesel powered and that the Marhoura locomotives would be deployed for strategic reasons or to haul trains in difficult mountainous terrain such as India’s northeast.

Nevertheless, Indian Railways has not deviated from its plan to electrify the entire network.

Indian Railways has a similarly ambitious goal to increase its share of total freight traffic from around 22% today to 45% by 2030. To achieve this, the National Rail Plan 2030 talks about increasing capacity.

For example by building high-speed lines to relieve congestion on lines with heavy passenger and freight demand. However, Indian Railways have been very slow on delivery.

The highly publicised plan to redevelop 400 stations has not taken off. Of the schemes included in the first phase, the redevelopment of Gandhinagar station has accumulated a huge cost overrun and work is nowhere near complete.

Redevelopment of Surat station has also not yet begun.

Contracts were awarded for the redevelopment of Bijwasan, Chandigarh and Anand Vihar stations more than a year ago, but construction has not started.

The Delhi High Court has slapped a penalty of Rs 12 bn on Indian Railways regarding a claim filed by Parsvnath Builders after the contract to redevelop the Sarai Rohilla-Kishanganj railway colony in Delhi was cancelled mid-way.

Former Member Engineering, Railway Board, Subodh Jain says, “Indian Railways talks about the need to open up, but railway bureaucracy remains unwilling to give up the monopolistic mindset. This is the reason that projects are getting stuck.”

Indian Railways response to current challenges has been defensive, at best. Following the Covid-19 outbreak, passenger services – which had been generating losses anyway – were halted.

“Not all categories of passenger services are loss making. Using the Covid-19 situation to continue the ban reveals a defeatist attitude and contains long term and adverse consequences,” says former Railway Board member, R R Jaruhar.

In the next three months, an entirely new Railway Board will be in place as the current members are due to retire. The National High-Speed Rail Corporation Ltd (NHSRCL) will also have a new chairman, as Achal Khare will retire shortly.

Railway circles are therefore hopeful that with the change of top managers, Indian Railways will come to acquire a fresh direction and thrust.

Source: www.railjournal.com