Restructuring The Indian Railways

By Ibu Sanjeeb Garg    By PUBLIC On Jul 18, 2017

Beating the Rhetoric

In September 2014 the government had set up a high level committee under Prof Bibek Debroy to look into restructuring of the Indian Railways. On March 31 ,2015 the Ccommittee submitted its interim report which has suggested sweeping changes in the workings of the Indian Railways . The reforms targeting the successful restructuring of IR will require, as a prerequisite, continued and committed support at apex levels; use of effective “change management” and “internal communication” strategies; involvement and buy in from various stakeholders, and strengthening of the human resource function to enable it to adequately support the management.

This report in its findings recommends certain changes that are not only path breaking in its format but also in its approach. First of all it gives a clear time frame of seven years within which it envisages the transition of IR into a fully government owned Special Purpose Vehicle(SPV).The major recommendations can be divided into commercial , operational ,human resources management and finally financing aspects .

With relation to the commercial changes the committee recommends the movement to a more simpler accounting system because the present accounting system of the Railways is complex. Next it recommends setting up of a completely independent tariff regulating authority that would take tariff decisions only on the basis of economics while absolving itself of the political commitments that pose to the tariff issue today. Any increase in fares must be accompanied by the betterment of passenger amenities and services. A railway infrastructure company should be created which takes care of the rolling stock and the infrastructure which is delinked from the daily operations of train running. Suburban services should be hived off or integrated under a Joint Venture mechanism with respective state governments. Private entry must be allowed in operational level eventually.

With regards to operational aspects the committee delves into the present functioning of the Railways and recommends entry of private sector in the operational aspect of Railways as well.It should distance itself from non core activities like running of hospitals and schools and concentrate on the core activity of running trains. Another major recommendation is delinking the RPF or the Railway Protection Force from the IR mechanism.

All existing production or manufacturing units must be integrated into one Indian Railway Manufacturing Company (IRMC) and no privatization must be contemplated at least initially. There is a need to shift focus to business/customer units like freight business, passenger business, suburban business, parcel business etc. which is essential for IR to be competitive, for its long term-economic viability, customer satisfaction and for being an adaptive/flexible organization. All A1 and A type stations should be manned by gazetted officers as station managers. This will also enable Group A services to have mandatory exposure to working at the grass-roots level in stations earlier in their careers, perhaps for 2 years. In the Junior and Senior time-scale, these posts will have to be re-designated as general posts. Supervisors and other staff who work in the stations will report to their departmental divisional officers only through the station manager. The committee also recommended that there are too many Zones and Divisions and thus a rationalization exercise is required. Further, Kolkata Metro should not be treated as either a Zone or as a part of IR.

IR with its 9 major services often suffer from what is called departmental squabbles. The five engineering services absorb officers via the Indian Engineering Services exams while the four non technical services the Indian Railway Traffic Service, the Indian Railways Account Service, the Indian Railway Personal Service and the Railway Protection Force officers are absorbed via the Civil Service examinations. Apart from these there is a separate Indian Railway Medical Service. The committee recommends the abolition of this system and creation of two major services technical service IRTechS and a non technical service IRLogS, while the IRMS must be restructured and eventually abolished. Also GM’s and DRM’s must be given greater autonomy and greater financial powers. Apart from these the committee recommends setting up an Indian Railways General Management Cadre from within the officers of the two above mentioned services to man the posts of GM and DRMs to be selected by UPSC in a fair transparent manner. This Committee recommends that Railway Board Secretariat Services (RBSS) and the Railway Board Clerical Services (RBCS) be merged with the Central Secretarial Services.

With regards to financing of IR the committee had a few prescriptions as well. State governments must show greater partnership with Railways especially in terms of forming JV’s with regard to suburban projects. The Central Government should review the dividend policy for IR and provide it with a GBS net of the dividend payment. The committee also stressed that it is very important for GOI to provide funding for projects that are commercially viable to IR not in form of grants, but as loan guarantees, so that the corporate entity implementing the project is market-focused from inception. The committee opined that IR must reach out to multilateral funding agencies as well as tapping its land banks for funds.

Overall most of the proposals mooted in this report have been in vogue in connection with the workings of IR for a few years now. IR has already started looking towards multilateral funding agencies and state governments for funding of projects. While it is easy to pitch a role for the private sector very often the IR acts in its social capacity in connection to setting up new routes etc which would initially be economically non viable for e.g. a train line to Naharlagun, a risk which the private sector would not be willing to participate. While the departmental squabbles are a reality in Railways yet it cant be denied that with 17 lakh employees Railways is unlike any other organization and hence it requires specialization at operational levels. To smoothen the inter services seniority process and the access to open line posts like GM’s the policies must become more transparent and steps like rotational posts for each of the service for the GM posts can be thought of. Nevertheless the report is pragmatic and gives a certain direction towards which IR can work in the future.

(Views expressed are personal)