Monday, August 24, 2015

Indian Railways has been analysed by expert groups and committees extensively and frequently. Two recent expert panels—led by Rakesh Mohan and Bibek Debroy—currently engage attention. Strangely, IR’s own record of any volitional reform initiatives has been lacklustre.

In fact, IR has had its own crisis of technocratic leadership, with no whimper from the mighty Board. As an agent of change, IR heralded a whole new revolution; today, it shuns change.

Take the Debroy committee recommendations, many of which reiterate those proposed by the Mohan-led National Transport Development Policy Committee. While decisions brook no delay on some suggestions—devising broad lines of business, re-designating Members of Railway Board, right-sizing the organisation, corporatising its production units and construction infrastructure—other proposals like restructuring ministry/Board and hiving off non-core activities will necessitate due diligence for optimal solutions.

First, IR must shed the parasitic ambivalence inherent in its widely, and mistakenly, perceived role of a departmental undertaking with public service obligation. It should have a commitment to being a corporate entity with inalienable responsibility to carry nation’s freight and passengers adequately, efficiently and economically.

Second, its capacity must expand with economic growth, and it should have right modal mix, with freight and passenger services as two separate business streams. Of a daily average of 13,000 passenger trains which IR runs—besides about 3,200 long-distance inter-city mail and express services—it operates 4,800 short-distance ‘regional’ trains that contribute to maximum loss in passenger business. They, along with around 5,000 suburban trains, may be better managed by a corporate entity.

Third, IR must bring out the value of its dual-function top management structure. There has been much talk about the IR Board structure being suboptimal, doing policy-making and implementation. Why can’t this dual function be reckoned as its unique virtue and strength, that has delivered well?

The success of NTDPC-advocated unified ministry of transport is predicated by different modes having compatible apex level corporate bodies, not separate ministerial/departmental entities. The mid-1980s experiment of ministers of state for different modes under a minister of transport didn’t work. The ministry of defence model for IR will be a retrograde measure.

Fourth, IR’s resistance to many softer aspects of change affects its credibility. Its departmental managerial cadres fuelled by separate induction streams breed a pernicious silo culture. The recruitment of officers can be through only two streams—technical and non-technical. IR may well do with no separate cadre for stores as well as personnel.

There appears no insurmountable problem in making a volitional transition from departmental to functional portfolios, say, a member each for (1) freight logistics services, (2) passenger business, (3) infrastructure, (4) rolling stock and equipment, (5) HRD, (6) finance, and (7) chairman as the CEO with responsibility for overall coordination and control.

The Board should function like the corporate sector, collectively focusing on policies, plans, strategies and coordination, delegating far more authority to field formations subject to due accountability. A bizarre proposal has been advocated by some experts—that each zonal general manager may choose even the design of a passenger coach for his/her zone. Operations and planning over a system like IR must be viewed as an integrated network-wide organic whole.

Like in armed forces, top general administration/command posts must perforce be manned only by those who go through the rigours of action in the field and interaction with customers.

Fifth, IR needs to right-size. It is over-staffed, which is a drag on its efficiency, economy and accountability. The committee has rued IR departments building ‘empires’, like a mammoth 23,325-personnel strong construction organisation and over 6,000 ‘work-charged’ officers’ posts continuing decades after the ‘works’ are completed.

There have been mundane functions taken up by the Board/ministry, with a staggering over 140 joint secretary and above level incumbents crowding in the Rail Bhavan. These numbers need to be pruned. Technical departments have inducted newer and costlier technologies; they have done little to optimise the yield, to rationalise workshops, sheds, depots. Non-technical departments too have been gathering fat. Several services and activities are outsourced, but permanent cadres show no shrinking.

Large stations, major freight depots and centres, maintenance depots and installations may all be endowed with local area managers. In March 2005, China streamlined the traditional 4-tiered into a 3-tiered system, by abolishing 44 sub-RRAs, equivalent of divisions on IR. Why shouldn’t IR attempt likewise? After non-core functions are hived off, outsourcing of activities is optimised, and right-sizing of the organisation is done, IR’s effective strength will be around 6-7 lakh. It would tantamount to a structure of 20-25 administrative units on the premise of each unit having an average of 25,000 workers. The existing 16 zones may thus be increased to, say, 20 and the entire 68 divisions subsumed.

Sixth, why shouldn’t IR just follow Chinese Railway’s example of all construction/installation outfits for track, signalling, electrification, as well as rolling stock manufacture hived off the main system and reorganising these as autonomous public sector enterprises competing for contracts?

Seventh, it is acknowledged that IR will be served well by an independent regulator for defining and safeguarding its commercial interests, also of its customers. The suggestion must not become a fetish. There is a clear predilection from the committee to create a regulator with the potential to become a parallel government with deleterious effect on the system.

The author was the first MD of the Container Corporation of India Ltd


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