Indian Railways departmentalism worse than 1905! Reforms to cut Railway Board, merge cadre the right step

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Published: January 2, 2020 11:58:57 AM

Departmentalism plagued the management of the railways, the railway board reform addresses this

Railway reforms, Arthur Cotton, Red Hill Railroad, Bori Bunder for Thane, indian railways, Development Authority, Railway BoardAs users of IR services, we often don’t appreciate the silos that exist in IR.

One can quibble about Arthur Cotton and Red Hill Railroad, built in 1836. But, officially, the advent of railways is dated to April 16, 1853, when a train left Bori Bunder for Thane (then Tannah), with three steam locomotives (Sindh, Sultan, and Sahib) pulling it. “The railway-system will therefore become, in India, truly the forerunner of modern industry”. This is something Karl Marx wrote, and most people are familiar with this quote. They may not remember where Marx wrote this and when. The piece was titled The Future Results of British Rule in India. He wrote it on July 22, 1853, though it was first published on August 8, 1853. In other words, Marx was probably aware of Bori Bunder to Thane. One can quibble about the way Indian Railways (IR) defines consequential accidents and related deaths. But, with that as a constant, 2019-20 is the first time in 166 years (counting from 1853) that there have been zero passenger deaths (so far). This is a vivid example of the modernisation that IR is going through. IR set up a committee to examine restructuring. This is often known as the Debroy Committee. It submitted an interim report in March 2015 and a final report in June 2015. These two reports listed more than 20 committees that preceded the Debroy Committee and took stock of their recommendations.

There was a terminal goal we visualised, as did others. There must be competition, and choice. With IRT (IR trains, for want of a better word) as a public service provider of railway transport services, there must be private sector entry, with a regulator (say, Development Authority). However, because of the way IR has historically evolved, one can’t simply unbundle the existing IR the way railways have been unbundled in other countries (sometimes unsuccessfully). Instead, one divides the existing IR into a Railway Infrastructure Corporation (RIC), and the new IRT. RIC’s common infrastructure is shared by both IRT and private sector providers. The regulator’s role is not merely to set tariffs, but also to ensure fair competition (such as access to track) between IRT and private operators. The railways ministry sets broad policy, the regulator implements principles of competition determined by that policy, and the present Railway Board becomes a corporate board for IRT. Skipping the finer details, this was the terminal goal. As a Committee, we decided to focus more on the process, especially human resources and finance. Out of the 20-odd committees other than ours, the 1994 Prakash Tandon Committee explored HR in detail.

The key ingredients of our reform template were the following: Allow private entry, including in running private trains; change composition of Railway Board; decentralise decision-making to zones/divisions, and even further below; separate core functions of running trains from non-core functions like schools and medical services; set up a regulator; unify various railway services; transit to commercial accounting; and unify Railway Budget with the Union Budget. If one ticks boxes, for an organisation that is so old and somewhat resistant to change, it is remarkable that so many reforms have been introduced since 2014. Private entry has already been allowed, and other than royal tourist trains, Tejas Express is the first private passenger train, on pilot basis. The composition of the Railway Board has been recently announced, with the Board functionally pruned. Decentralisation of decision-making has been done. Separation of core functions from non-core ones is being implemented at a zonal level. Transition to commercial accounting has been completed at the zonal level, and the railway and Union budgets have been unified. Clear computation of social costs is a function of commercial accounting being done throughout the IR system. This leaves the regulator and unification of services. Recently, eight Group A services have been unified into the Indian Railway Management Service (IRMS). While details are awaited, this will presumably first be done prospectively, for new entrants. Retrospective application will always face more challenges.

As users of IR services, we often don’t appreciate the silos that exist in IR. Think of a station. Who takes care of station amenities? Platforms, drinking water, toilets, waiting rooms, and over-bridges are the responsibility of civil engineering. Lights, lifts, escalators, fans, and water-coolers are looked after by electrical. Public address systems, departure boards, and train indicator boards are the responsibility of telecom. Reservation, and ticketing is with commercial (with IT thrown in). Everything on-board (including sockets, fans, and lights) is with mechanical. I did say drinking water is the responsibility of civil engineering. But, do remember, water-coolers are the responsibility of electrical. Within a station, there are tracks, platforms, places where passengers wait, toilets, and perhaps even trains that come in. These need to be cleaned. In one station I visited, I counted 17 different cleaning contracts. Have you wondered about the use of hot-cases on trains? Why not microwave ovens? When it was proposed many years ago, there was departmental wrangling between those who looked after electrical and those who looked after utensils, those who looked after procurement and those who looked after catering contracts. Silos, and not talking to each other, are common to many organisations. But, this is compounded by separate services with separate lines of accountability, and encadred posts for vertical mobility. In plain language, there are quotas, with posts reserved for specific services.

Departmentalism is worse than it was in 1950s. And much worse than it was in 1905, when the Railway Board was formed. However, the Railway Board went through a major change in 1951. It was time for another change in 2019, and HR reform feeds into that.

The author is Chairman, Economic Advisory Council to the PM

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