Indian Railways corporatisation: PSU has stuck to its departmental character

With his acknowledged reputation Suresh Prabhu as IR’s helmsman raised expectations that it would be rescued from the tail-spin it had lapsed into. Prabhu underscored in his last budget speech the need to “reorganise, restructure and rejuvenate” railways.

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Despite calls for corporatisation, IR has stubbornly stuck to its departmental character.

With his acknowledged reputation Suresh Prabhu as IR’s helmsman raised expectations that it would be rescued from the tail-spin it had lapsed into. Prabhu underscored in his last budget speech the need to “reorganise, restructure and rejuvenate” railways. A clear categorical imperative for IR is to re-define and re-orient its management structure; optimise the use of its invaluable assets of real estate and manpower; segregate freight from passenger business; make its core businesses customer-centric in terms of competitive costs, speed, convenience, and reliability; ensure quality in investments; drastically cut costs; shed non-core establishments and activities; corporatise and privatise development and manufacture of railway equipment, also construction as well as suburban and regional passenger services. Although several pioneering projects have been contemplated, inter alia, a bullet train corridor, transformation and mobility cells, re-development of stations, etc, railways somehow looks rudderless and moribund.

Most railways world over, including largest systems in Russia, China, Germany, France, Britain, et al, are now autonomous corporate entities, having shed their garb of government departments. Despite strong advocacy by several expert bodies that IR be corporatised, it has stubbornly stuck to its departmental character, inevitably perpetrating bureaucratic rigidities and wallowing in competitive frailties of babudom. Within the confines of existing framework, Railway Board is an exemplary dual function administrative model. No doubt, over the years, serious distortions have crept in; the structure has, inter alia, been compartmentalised, leading to competitive departmental empire-building, rendering it perilously obese, extortionist, lethargic, and dilettantish.

Heeding Alexander Pope’s seminal message—“For forms of government let fools contest, whatever is best administered is best”, IR may volitionally and sincerely examine following broad conceptual profiles which would need to be duly modulated and fine-tuned. For instance, the number of officers’ cadres may be restricted to no more than three, say, (i) civil and signal engineering, (ii) mechanical and electrical engineering, and (iii) commercial and transportation, finance and personnel. There may be a rigorous selection process at the mid-career level on completion of, say, 12-15 years of service, by an independent body, if not UPSC.

Minister Prabhu has made a welcome, though yet only a symbolic beginning, towards functional integration by designating two members of the Board—for Traction and Rolling Stock. For the present, with minimal material change, Board’s composition could be a member each for (i) Freight logistics services, (ii) Passenger business, (iii) Infrastructure (tracks, bridges, land, buildings, signalling, electrification, (iv) Dynamic Assets or Rolling Stock and equipment, (v) HRD, including industrial relations, vigilance, safety and security, (vi) Finance, including accounts and material management, and (vii) Chairman as the CEO for coordination and control, strategic planning, R&D.

Functional requirement must perforce be overriding consideration in determining the apex management pyramid consistent with railways’ raison d’etre being production, marketing and operation of transport services. As strongly argued by Kakodkar Committee on rail safety, and like general command posts in armed forces (Brigade, Division, Corps, or Army) held only by specially selected and trained officers mostly from fighting arms, general administration posts—like Divisional and Zonal chiefs on railways need be manned only by those who are duly exposed to 24X7 rigours of operations, maintaining interaction with customers. Rail minister would indeed be concerned at the strange spectacle of railway officers primarily engaged in production, marketing and operation of rail transport being almost conspicuous by their absence on the panels of DRMs and GMs.

It transpires that acute distortions have been creeping in, for example, the advantage of lower minimum age eked by candidates for engineering services vis-à-vis those for civil services examination. The Special Class Apprentices joining as Mechanical Engineers have had a similar unintended advantage that helped them garner a lion’s share of top general posts. The inter-departmental ceilings or quotas that have come about for GMs’ posts do in effect exacerbate the distortions. It devolves on the minister to redress the grave anomalies to serve the organisation’s best interests.

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Much like country’s entire bureaucratic apparatus steeped in pyramids of yesteryears, IR too has added layers when it needed to be far flatter. Strangely, it has just added another tier by creating additional posts of Director General for Stores, Signals, and Personnel, in addition to existing DGs/ Medical and Security. Now there may well be a DG level post for each functional department on IR that will enable officers in respective domains to rise to, though excluded from general administrative pool.

Prabhu needs to examine the utility of IR’s administrative apparatus across its 16 Zones and 68 Divisions. Currently, Divisions are mere mirror images of Zones with delegated authority. Today, with emphasis on IT-enabled flat management structures facilitating quick decision-making and efficient delivery, it would be prudent to streamline the traditional four-tiered organisation into a three-tiered system, as Chinese Railways did in 2005, by abolishing its 44 sub-regional entities.

A small beginning has been made for posting junior administrative officers at some major stations. All large station complexes, major freight depots and centres, maintenance depots and installations may be endowed with local area managers selected from the general administrative pool with delegated authority over all functionaries and disciplines. In due course, these managers will constitute the bulwark of administrative resource for the organisation, from which to choose for further exposure and training to fill higher administrative positions.

If duly nurtured and wisely led, IR will bounce back, like China Rail. CR lagged much behind IR; in just 25 years, CR has gone far ahead of the laggard IR, and emerged world’s numero uno.

Senior fellow, Asian Institute of Transport Development. Views are personal.

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