Tuesday, December 27, 2016

                                               NATIONAL CONVENTION

         on “ Debudgetisation and Unbundling of Indian Railways” 

                    on 1st February 2017 at 15.00 hrs,

Ambedkar Bhavan, Rani Jhansi Road, Paharganj, New Delhi:

The Indian railways operate more than 12,000 trains, transporting nearly 23 million passengers daily. This vast public enterprise is virtually a state within a state. It runs schools, hospitals, police forces and construction company and employs a total of 1.3 million people, making it the seventh largest employer in the world. It is in urgent need for modernization.

Indian Railways, since its inception in the year 1853, has been serving the vast population of the country, moving goods and Passenger services from one end of the country to other braving all odds. The Railways is eco-friendly, energy efficient, reliable, high frequency and large capacity. And no doubt it is the cheapest and safest mode of transport. Indian Railways has an integrated diversified culture, language, community, caste and creed of this vast country. It has provided bread and butter to lakhs of people. Besides, a large section of the people is dependent on Indian Railways to have two square meals for themselves and their family members.

The Railways was originally constructed by the private players, land being provided free of cost, paid fixed subsidy to the private companies by the government. But those private companies had failed to run this system efficiently and the system started disintegrating. Services deteriorated drastically, lines after lines were closed denying connectivity to a large population of the country, resulting in the government gradually taking over the lines and put them on rail.

Upon the recommendations of the Acworth Committee, Railway Budget was separated from the General Budget of the Government of India in the year 1924 with a view to provide undivided attention for the development of the Railways.

Considering all aspects for maintaining the homogeneity and integrity of the country, the great men who framed the Constitution of the country had kept the Railways and Defence in the Central List only, and both have been successfully maintaining the homogeneity and integrity of the country despite all odds.

The assets of the Railways have been stabilized, expanded, modernized by generating resources internally and through the General Budgetary Support. Unfortunately, the government has started to reduce the Budgetary Support dropped from 75% to 30% during the period from 5th Five Year Plan to 11th Five Year Plan, causing serious constrain in the matter of expansion, development, de-congestion, maintenance of rolling stock in good fettle to ensure more and more comfortable and safe travel. Large population of the country residing in the remote areas are feeling exclusion as they are yet to see a railway track within their vicinity.

Apart from the aforesaid melody, the Railways is the only organization which is paying dividend to General Revenue, whereas National Highways, Ministry of Shipping, Airport Authority of India etc., where General Budgetary Support is provided, are exempted from the obligation of payment of dividend. Over and above, Railways is forced to bear the brunt of social service obligation of Rs.25,000 crore per annuam.

Given all this, the real reason for scrapping the Rail Budget is this: if the Railway is no longer a state monopoly, it stands to reason that the first step should be to delink it from state finances. If seen from this perspective, and one that is the central focus of the Bibek Debroy Committee’s recommendations. The scrapping of a separate budget for the railways is just the tip of the iceberg -a mere starting point for a host of measures that are to follow. The scrapping of the Railway Budget is just a mere indication of what is to follow. Now let us get into some of the other aspects of the Debroy Committee’s Report, which if implemented, would not only jeopardise the jobs, working conditions and terms of employment but which is likely to throw the Indian travelling public to the wolves. Moreover, the predatory nature of a privatised rail system is likely to cut off large sections of the population in remote poorly-served areas, making travel expensive and cause skyrocketing of freight rates, adding to inflation woes of the common man. There is enough evidence available from several countries that have followed this path to prove that this is just not scare mongering.

Being assigned a task in which the results was already predetermined, Debroy and his team set out to determine the course that the government ought to take to privatise the Indian railway system. The key elements of its recommendations thus follow a pattern. Having decided that there ought to a “division of responsibility” between the Government and the railway organisations running the rail system, it was bound to rule that the annual budget would become redundant. It thus made the Government and the Ministry irrelevant, except in setting lofty policies nobody was bound to follow. And, once it was decided that the rail system would be opened to “competition” it was also bound to recommend the presence of a so-called independent regulator. This is especially important because it is only the regulator which would open up the publicly-owned infrastructure for exploitation by private players.

A key aspect of the Debroy Report is its prescription for unbundling the railway system. While the rationale is supposedly to make it more “competitive” its true concealed intentions lie elsewhere. The Debroy Committee recognised that no private player – not even the biggest ones such as a Reliance or the Tatas – would have the appetite to contain the huge enterprise that is the Indian Railways. Unbundling the system, by separating the railway infrastructure such as tracks, stations and signalling from the train operations (both freight and passenger), would allow the private bahasurs to enter the picture in the name of promoting competition. As we all know, unbundling is the device used by the state to enable private power companies to enter and thrive in the Indian market. Apart from this, allowing private entities to “manage” and run a host of railway services is also meant to enable quick profits for private entities without having to undertake significant investments. After recommending all this, Debroy had the audacity to ask the Indian Railways – or whatever remains of it – to focus on improve its efficiency in order to compete with the private operators! In line with the biased agenda, the Debroy Committee recommended that the Railway Board be reduced to the status of a rail operator. It said that its status as a regulator and policy maker were no longer needed in the new dispensation. Since the submission of the Committee’s Report, changes have been made to the composition of the Railway Board, which ensuring the formation of a separate railway infrastructure company. The accounting format in the Indian Railways is also undergoing changes, to reflect the functioning of a fully commercial organisation, without which privatisation would not be possible. An integrated payroll accounting system has been implemented and is centralised at New Delhi.

The regulator would have a key role in determining not only time tables but also tariffs in the new regime. The experience with the Indian regulatory regime – those in telecom, electricity or even the Director General of Civil Aviation – does not give much room for optimism that it would defend public interest. A key element that is missing from the Debroy Report is about its absolute silence on how to apportion accountability for meeting safety standards in the Indian Railways, especially when private operators come into play. Needless to say, in the name of competition, the Indian railways ought to vacate its non-core areas of operation – not only security, hospitals and schools but also production and construction units across the country that have served the Indian Railways well for a very long time. Of course, in keeping with this mindset, key infrastructure of the Indian Railways that no other entities possess – maintenance sheds, yards and workshops – would either be privatised or, at the very least be forced to share with the competition. The utter idiocy of this can be captured by the imaginary example of forcing Reliance Jio to share its mobile network towers with Airtel! If it is not acceptable to Reliance, why should the Indian Railways be forced to do this?

This arises from the Indian Railways’ stature as the single largest enterprise in the country – in terms of the number of employees or the value of its assets. No other infrastructure operator comes anywhere close to what the Indian Railways is. This has significant implications for the economy at large because it is so vast and touches so many lives and affects aspects of the wider national economy in a manner unlike any other entity in India. Given this, there is value in retaining the Railway Budget because it gives valuable once-in-a-year focus to this all-important infrastructure.

Permissible speed of Mail and Express Trains is between 110-130 kmph, but the average speed of Mail/ Express Trains is 50 kmph, while that of freight trains it is 25.5 kmph. This is because of constraining in the line capacity of large sections of the Indian Railways. Even, out of 1219 sections of High Density Traffic, 492 sections are over saturated with 100-150% capacity and 228 sections with 80-100% capacity, while 80% is the ideal capacity for smooth and efficient movement of trains. This has reduced the movement of both passenger and goods trains. This also affected the turnaround of rolling stock and efficiency indices of the Railway men, and freight traffic diverted from rail to road, as National Highways have been developed with huge Government’s Budgetary support.

It is noted with dismay that, without going through the causes of congestion in the existing Railway System and without suggesting any remedy, the High Level Railway Restructuring Committee, headed by Bibek Deb Roy, has gone for setting up of Rail Tariff Regulatory Authority of India, proposing handing over virtual management of the Indian Railways to new entity, outsourcing of working of train services, encouraging the system of outsourcing of regular works of operation and maintenance of train services, Production Units, hospitals etc to different entities. We have the bitter experience of formation of the Tariff Regulatory Authority in the Telecommunication, Airport Sectors, which have destroyed the BSNL and Indian Airlines.

Indian Railways has been receiving quality rolling stock, hassle-free and timely with lesser cost because of unique service provided by the Railway Production Units. The proposal for formation of the Indian Railway Manufacturing Company will cause constrain in the matter of timely receipt of rolling stock, quality and will escalate the cost, causing further constraint on the working and finance of the Indian Railways.

In many advanced countries, such experiment was fraught with danger. Train services deteriorated, safety jeopardized and those governments had to pay hefty grants of billions of Euros/Pounds/Dollars etc. to maintain the system, and ultimately, they had to take back the track as was experienced in the UK, USA, New Zealand and other countries.

The Deb Roy Committee has recommended to dismantle the Railway Board. The Railway Board since its setting up has run and improves the Railway System reasonably. Interference on political consideration has done immense damage to the system.

It is emphatically stated that, the Railways can recover from the present illness, if General Budgetary Support is increased and make it dividend-free as is in the case of National Highway Authority of India, Airport Authority of India, Shipping Ministry etc., and Social Service Obligation is reimbursed, so that that the Railways could go a big way, fighting decongestion of high density and other elite routes, which will increase average speed of both passenger and freight trains and subsequently increase the mobility of rolling stock, viz. locomotives, coaches and wagons, and more and more passenger and freight trains would run on the same routes with same number of rolling stock, generating revenue for the operation and maintenance of the Indian Railways most efficiently.

Working Class unity Zindabad.


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