Getting the Railways back on track

Roshni Rajiv

Eight suggestions to reform the current rail structure in tune with the needs of the 21st century

Indian Railways is more than 150 years old and has played a vital role in the socio-economic development of the country. Today, the Railways is one of the largest rail networks in the world, transporting around 23 million passengers every day and employing 1.4 million people.

The Railway Board single-handedly manages the railway network consisting of 17 zones and 68 divisions. Since Independence, the growth of the railway system has been hindered by the Board’s muddled performance.

This has contributed to a continuous decline in the Railways’ market share in the transport sector. The National Transport Development Policy Committee Report 2014 shows that over the past five decades, 61 per cent of passenger transport and 59 per cent of freight transport has shifted from rail to road. The annual Railway Budget focuses on improving services. However, out of the 674 projects worth ₹1.6 lakh crore sanctioned in the past 30 years, only 317 were completed. The deficit required to complete the remaining projects is estimated to be over ₹1.8 lakh crore.

The rail ministry is ignoring the fundamental change required to transform Indian railways to suit 21st century demands. The way forward is to dismantle the archaic organisational structure set up during the 19th century and establish a more efficient mechanism to operate these 17 zones. Now, with another Railway Budget round the corner, the key question is, will the doer in Suresh Prabhu deliver to expectations? Here are eight suggestions focusing on reforming the current structure to suit the needs of the 21st century:

Decentralisation of power

The Railway Board will function only as the policy and regulatory body. The chairman will be an expert with a team focusing on each core-business activities.

The Board could hand over the management of non-core business activities such as catering and ticketing or managing of railway research institutes and so on to private players on PPP mode.

Empowering zonal railways

Each zonal railway will be the final decision maker on operation, management and development of its own zone, without consultation with the Board. For instance, each zonal head can decide about constructing stations and platforms, adding or removing trains, upgrading rolling stock, regulations for safety, cleanliness and hygiene. Each zone should work within the framework of policies set by the Board.

A company could be set up to run each zone. The Konkan Railway Corporation, which operates and manages the Konkan railway zone, is a model company.

Development under PPP

Each zonal company gets into PPP for renovating its stations similar to the development of airports in metros. The presence of a private entity would attract FDI easily.

Monetisation of property

Indian Railways is the owner of a large amount of land across India whose valuation is very high owing to the prime location of the station in a city or town.

At present, railway properties are underutilised. Each zonal company brings in expertise for optimisation of land and air space for commercial purposes such as shopping malls and business centres. This will not only generate more employment opportunities but also generate additional revenue to compensate railway employees adequately and provide subsidised travel fares as required.

Independent zonal budget

Each zonal company would prepare an annual budget to govern its zone and divisions.

This would enable individualistic growth of each zone based on its requirement. The annual financial budget directly provides the budget outlay for each zonal railway.

Fixing of travel fare

In consultation with the zones, the Board will set the upper limit of fares and charges for passenger and freight travel based on distance travelled which will be subject to periodic revisions. The existing framework of the fare revision committee will be strengthened.

Co-ordination between two zones and profitability

To lay new railway routes, the zonal companies concerned will work together. For instance, to run a bullet train between two zones, the zonal companies could enter into a JV to construct the infrastructure and invest in modern locomotives. The expenses would be shared proportionately by each zone.

Similarly, each zonal company would be accountable for their own transport output and profitability. The income generated for a rail journey gets divided among the zones proportionately.

For instance, if the journey covers three zones, then each zone earns income for tickets booked from its zone.

Performance review

The Board reviews zonal companies’ performances annually and provides feedback for improvements. Periodic review and modification of policies required to facilitate further development of railway.

For instance, faster connectivity with high speed trains would reduce the travel time between two locations. This would call for re-evaluation of current demarcation of 17 zones to reduce it to fewer numbers for easier operation.

The Expert Group Report 2012 brought to light the downtrend of the Railways due to its diminishing efficiency and eroding share in national transport and predicted it may possibly end up as a burden on the national economy instead of being its bulwark and vital support.

These suggestions are indicative of the railway reforms to revamp and modernise Indian Railways into a world class mode of transportation to cater to the needs of the 21st century and to support the inclusive growth of the nation.

One would wish for a reform-oriented Railway Budget instead of announcements of new lines and introduction of new trains based on political compulsions.

(The writer works with the Centre for Public Policy Research.)