The Railways is on life support: Railway reforms should go beyond bureaucracy

Wrong policy track: The Railwys must focus its resources on building technological capability

India’s vast railway network is on life support. Drastic changes, such as passenger fare revisions, are required

R Srinivasan

Like most of us, I got hooked on trains as a small boy. It wasn’t just the annual hike across the Indian sub-continent, from New Delhi to Madurai by train which did it. That three-day journey by train, in the peak of summer, was more remarkable for the incredible temperatures inside our second-class compartment after 10 hours of roasting under the pitiless Indian midsummer sun, as well as the sheer magnitude of the arid brown vastness rolling endlessly past the window. No, it was the treat which came after.

Once we reached Madurai, where my grandfather ran a small school for the children of Madurai’s textile mill workers, my daily routine was to hitch a painful, bumpy ride on my uncle’s cycle to the Madurai loco shed, where my uncle’s classmate’s father was the chief engine driver. That gentleman, a cheerful Anglo-Indian, would let me happily root about the loco shed. The Madurai-Trichy section, which that shed serviced, was steam-powered those days, which meant I could mess about with tonnes of coal and get gloriously dirty — and once in a while, get to ride one of the engines, up to the junction, or even up to Trichy and back, tooting madly on the steam whistle. It was little boy heaven.

But romance is one thing, reality is another. Today, the glory days are just a memory. And so are, going by the latest numbers, the glory days of the Indian Railways. True, it is an unimaginably large network, with over 70,000 km of tracks, over eight billion passengers carried and a billion tonnes of freight hauled every year. It — and this is no insignificant detail — is also one of the biggest employers in the world, with over 1.4 million employees.

But all of this is bleeding red. At a current operating ratio of about 120 per cent — which means it is spending ₹1.20 for every rupee earned — the Railways is on life support, with cash flows being kept going by advance payments from a few government and public sector clients.

One would have thought that with waters literally rising above its head, the Railways’ top brass would be showing a greater sense of urgency in raising more funds to keep going. Yet, when it did announce a fare hike a few days back, it was announced tentatively. In fact, just a couple of days before the fare hike was announced, the Railway Board Chairman vigorously denied that any fare hike was in the offing!

Minuscule hike

The hike, when it was announced on New Year’s eve, was trifling — one paise per kilometre in basic fares, two paise per kilometre in mail-express non-AC fares, and four paise per kilometre in AC fares. This would translate into a fare increase of ₹40 on a 1,000 km journey in an air- conditioned coach — a fraction of what most passengers travelling on that coach would have spent to reach the station! Even here, the Railway Minister was at pains to point out that the fare hike would not impact more than two-thirds of rail passengers, who used suburban trains, which were left untouched.

This defensiveness — considering that fares were last hiked in 2014-15 — is inexplicable, given that a kilo of onions probably cost more than a 100 km trip, and the prices of almost all other forms of transportation services — from rickshaws to buses to airplanes — have gone up substantially during the same period.

It is even more inexplicable, given the parlous state of Railway finances. Earnings, according to reports, were already over ₹19,000 crore shy of budget estimates as of end October. The Railways lose around ₹35,000 crore a year in their passenger business. To make matters worse, the freight business, which for decades was flogged to cross-subsidise populistic network expansion and unrealistically low passenger fares, have been hit hard by the slowdown in the economy and rising competition from road transport.

This means that freight rates really cannot be increased at the moment, which is only going to increase the pressure on earnings. With GDP growth pegged at just 5 per cent for the ongoing fiscal (State Bank of India estimates it at a more realistic 4.6 per cent), the Railways would simply not be in a position to push up its revenues by any meaningful metric without a significant increase in fares across all passenger classes, and not just the long suffering AC travel segment.

Instead of which, the big bang reform that the Railways managed to come up with is a bureaucratic one! The Cabinet recently cleared a proposal to merge the existing eight services of the Railways (it has separate services for electrical and mechanical engineers, traffic, personnel, finance and so on).

Admittedly, some form of reform of the Railway management structure was long overdue — but having your managers squabbling over promotions, pay scales and seniority in the new set-up is hardly conducive to coming up with a big push on structural changes and profitability.

The Railways came up in what was essentially a pre-industrial country. As a result, it developed the capacity to make or build everything it needed. The Railways built its own locomotives and rolling stock, laid track and built stations, built townships to house its burgeoning staff and power, water and drainage systems to service them.

Over time, this got stretched further and further — it built schools, colleges and hospitals (it runs 91 hospitals), and has built one of the world’s largest catering networks. I remember one speech by Mamata Banerjee when she was Railway Minister, when almost the entire Railway Budget speech was about building more colleges and hospitals, shelters for the homeless and subsidised meals for the poor!

Stopping this kind of wastage of Railway resources and focussing on building technological capability and efficiency are the kind of reforms that the Railways needs now, not a bureaucratic chess game. Hopefully, the upcoming Budget will least try and address some of the Railways’ real problems.

Courtesy: The Hindu Business Line