With the Indian Railways finances beginning to bite, and the finance ministry making it clear it will not be able to help much in FY17, Railway minister Suresh Prabhu has asked Railway Board Members for suggestions – within 15 days – on how the Board needs to be restructured.
Till October, Indian Railways were around 10% short of their internal target for passenger and freight revenue, making it clear that FY16’s operational ratio target of 88.8% will be breached significantly. On top of this, the Railways needs to spend at least Rs 32,000 crore next year on account of the Seventh Pay Commission (SPC) – since the SPC will be applicable from January 2016, the burden in FY17 will be Rs 40,000 crore.
The biggest problem, Prabhu has highlighted, is the “lack of cross functional collaboration” as a result of which “any theme which requires us to collaborate has languished, e.g., Increase in average speeds, integrated use of Information Technology, integrated planning, motive power strategy, etc.” In addition, Prabhu has asked Members to orient the Board “to business needs rather than functional needs”, as a result of which “we have made limited progress in increasing non fare revenues which is primarily due to lack of this ‘business mindset’. “Corporate goal”, Prabhu has said, “must take precedence over anything else”.
Advertisements, from where the Indian Railways gets only Rs 350 crore a year right now, are a good example of such lack of cross-functional collaboration. If the Railways are to get higher revenue from here, there will have to be a concerted effort to get advertising in railway stations as well as on trains. Any company working on this will have to deal with the engineering department for platform advertising, with the electrical department if the advertising is to be backlit, with the mechanical division if the advertising is to be on trains – there are 13 different services within the Indian Railways.
The Railways Project Simran, to be able to do 24×7 tracking of trains was, to cite another example, launched as a pilot by the signalling and telecom department but got stalled due to factional rivalries in the Railway Board – the project was finally given to traffic operations and has yet to re-start.
In another case involving the making of dual-traction locomotives – that can run on both diesel and electricity – a tussle between the mechanical and electrical wings of the Railway Board ensured that the pilot project of 10 locomotives was split between Chittaranjan Locomotive Works (electrical) and Diesel Locomotive Works (diesel) instead of being entrusted to just one of them.
While restructuring of the Railway Board has been something several committees have suggested in the past, Prabhu wants the Railway Board Members to make suggestions so that there is a greater buy-in from within and, in any case, the suggestions will probably be more realistic than those from committees set up under non-Railway officials. The financial powers of the Board had, in any case, changed considerably since Prabhu had decentralized a lot of decision-making down to the level of general managers last year.
The Indian Railways’ earnings up to October this fiscal were lower than its own internal target for the period by Rs 9,086 crore or 9%, resulting in a worrisome operating ratio of 97%.