Wednesday, October 8, 2014

Column: Reforming Railways

Soon after assuming office in 2004, Prime Minister Manmohan Singh emphasised on restructuring the bureaucracy to improve the country’s governance. He set up an administrative reforms commission and remained content ever after. The Modi government, too, has opted to get an MRI for the Railways, knowing well that no other public institution in the country has been studied and analysed as extensively.

Much has been said about Railway Board becoming “unwieldy” as it enunciates policy and implements it too. Doesn't it help policy-making derive the benefit of domain knowledge and realism of people at the helm who also assume responsibility for its implementation? The Railway Board has been an exemplary dual-function administrative model, the highest executive for technical direction and operation of the Railways and as a government department for planning and development of the system.
Following Sir Thomas Robertson's appointment as Special Commissioner for Railways in August 1901—after the post of Director General, Railways and the railway branch of PWD, was abolished—a three member-Railway Board assumed office in March 1905, including a President with “thorough practical knowledge of railway working”. A somewhat modified structure by the Ackworth Committee saw the Chief Commissioner as President of the Board and Secretary to Government along with a Financial Commissioner and three Members assisted by six Directors, in 1947. The post of Chief Commissioner was re-designated Chairman, Railway Board, in 1951.
With Members as ex officio secretaries to the government, the Railway Board has, of late, been far from a well-knit, cohesive corporate group. It doesn't function as a Board must, per force, do for a gigantic commercial entity as the Railways. The present departmental structure results in compartmentalisation and its concomitant ills, including competitive empire-building. Operational silos sap the energy and vitality of the system. The recruitment and training regime for its managerial cadres needs to be overhauled to rid it of the culture of disparate departments. There may be just two streams of officer cadres—one, technical and, the other, general. The departmental representation in the managerial cadres may not go beyond the mid-career level on completion of, say, 15 years of service. While the incumbents at the Board level may not be drawn from, or owe loyalty to, any specific disciplines, they must pass the test of corporate leadership and professional competence, and be given a minimum tenure of three years.
For the present, a possible composition could be a Member each for (i) freight services, (ii) passenger services, (iii) infrastructure (tracks, bridges, buildings, signalling, electrification, (iv) assets including rolling stock, equipment, and real estate, (v) HRD, including industrial relations, vigilance, safety and security, (vi) finance, including accounts and material management, and (vii) chairman as the CEO for coordination and control, strategic planning, R&D, and external relations. The person at the top has to be a visionary leader with the ability to communicate with political leadership and coping with the challenge of change.
There are too many routine and mundane functions taken up by the Board/Ministry, with over a hundred joint-secretary-and-above level incumbents crowding the Rail Bhawan—the Railways has added layers when it needed to be far flatter. It invests in new technologies and persists with old staffing patterns.
The Railways will be better served if it first used the secateurs to begin shedding half of the gazetted cadres ensconced in Rail Bhawan itself. Large station complexes, major freight depots and centres, maintenance depots and installations may all be endowed with local area managers with delegated authority over all functions. This can be in the same manner that the Chinese Railways followed in March 2005—it streamlined the traditional 4-tiered organisation (analogous to IR's) into a 3-tiered system, thereby abolishing the equivalent of all divisions of IR.
There is little justification for the IR to continue to commit its scarce resources to in-house manufacture of rolling stock and other equipment, when these have failed to modernise and have fallen steadily behind commercially operated alternatives. To start with, let the IR’s equipment manufacturing units be corporatised forthwith, preferably with the participation of the private sector. Its moribund R&D outfit is in need of immediate re-orientation and restructuring.
As strongly advocated by the Kakodkar Committee, the top general administration posts of the Railways must be manned only by those who are duly battle-inoculated, exposed to the rigours of operations and interactions with customers. There may be a rigorous selection process for officers from different disciplines to be in the general administration pool. For objectivity and transparency, a standing selection panel will need to be appointed, with an acknowledged HRD expert, another one from business/industry, one from academia, besides a senior railway officer.
The Railways needs to be freed from the whims and caprice of policy-makers. Most of the ministers in charge have viewed the Railways as a fiefdom. The rail budget has no rationale in today's public finance. The IR will be served well by an independent regulator for defining and safeguarding its commercial interests alongside those of its customers. An advisory council with representation from business leaders, reputed academicians and professionals should be put in place for advice on investment and suggesting business plans.
The IR must shed the ambivalence inherent in its perceived role of a departmental undertaking with a public service obligation and, instead, have an unambiguous commitment to being a corporate entity. Today, the IR carries just 30% of country’s freight and 10% of its passenger traffic. It carries these dwindling volumes even as the overall offering keeps growing. It should focus on clear goals—the creation of adequate capacity, generation of substantial investible surpluses, optimal pricing and substantial downsizing.
A rational and viable fare and freight structure is an imperative. Freight transport costs have been falling the world over; rail freight charges in the country also need to be brought down for the IR to assume the role of a leading logistics solutions-provider. All its high density arterial corridors remain clogged. Rail freight is the very life-blood of the economy. Most expert bodies have argued for IR to achieve an optimal 50% share in country’s freight market by end of the 15th Plan. It needs to create a critical mass for retail freight, in partnership with others.
The IR must rationalise its passenger services as a line of business, separate from freight, and leave the management of the suburban/intra-city services, regional services and other short-distance segments to an autonomous corporate entity under its overall umbrella as well as the container-freight business. The IR needs to substantially expand and modernise its infrastructure, stations, pre-board and on-board services. It must upgrade well ahead of the completion of the exclusive freight corridors to ensure 10-12-hour journeys on the 1,500 km Delhi-Mumbai/Delhi-Kolkata Rajdhanis, as envisaged fifty years ago.
The IR, the iconic Goliath, has steadily forfeited its pre-eminence in country’s transport business. It needs to recover fast and learn to sprint again; just jogging, if at all, will keep it where it is. It generates just 1% of the country’s GDP; its potential and the expectations of its stakeholders demand it should be aiming for at least double that—a huge task in an expanding economy. If duly nurtured and wisely led, it will bounce back, like China Rail which lagged IR; but in just 25 years, China has gone far ahead and emerged world’s numero uno.
The author was the first MD of the Container Corporation of India Ltd


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