IR needs a new, genuine customer-centric framework along with exponential capacity enhancement for traffic growth with reduction in tariffs for freight and increases for lower-class passengers.
Much to the credit of PM Narendra Modi and Railways minister Suresh Prabhu, not only has the colonial era separate rail budget been scrapped, but the long-awaited rail tariff regulator, now in the enlarged role of Rail Development Authority, approved. Several pioneering rail projects have been contemplated. Little of all that envisioned in the FY17 Budget speech has happened.
A general popular perception endures—of railways looking adrift. Its core business—freight as well as passenger carriage—constantly loses market share; its finances are wan and dreary. IR’s energy appears getting dissipated on a minutiae of routine amenities euphemistically termed ‘projects’. It seems afflicted by ‘consultivitis’, crowd-sourcing ideas. Prabhu just said, he aims to raise IR’s annual revenue level at Rs 2 lakh crore in two years. With revised FY17 budgeted revenue pegged at Rs 172,000 crore, that doesn’t indicate a challenge. IR’s size and potential would justify its revenues generating a 2% share of country’s GDP, against 1% now.
But, danger is the future. On passenger side, IR already faces severe competition from rapidly evolving aviation sector, new style, high-capacity buses, besides the burgeoning personal car fleet. Likewise, for freight, high-capacity trucks carry goods door-to-door. The 96,000 km highways length that carries 40% of India’s road traffic is being expanded to 200,000 km with capacity to carry 80% of goods traffic. Trucks will clock much higher mobility, further facilitated by the new GST regime. Long-distance rail haulage of coal will keep diminishing, compelling IR to look for life beyond coal, currently accounting for half of its total freight business. POL traffic will further dwindle as pipelines connect refineries with consumption centres.
IR, thus, needs a new, genuine customer-centric framework along with exponential capacity enhancement for traffic growth with reduction in tariffs for freight, and increases for lower-class passengers, which alone fetch 70% of all passenger earnings, accounting for a Rs 30-35,000 crore annual loss. It needs to segregate its freight and passenger businesses. While concentrating on inter-city services, IR may well corporatise its sub-urban and regional passenger services. Essentially, it needs to make its passenger operations faster, convenient, reliable and profitable.
With its vision key-holed on bulk commodities like coal, it has, for example, less than 2% share in FMCG segment, 1% in auto and textiles. For weaning away high-value non-bulk sector from road, it needs to create critical mass of piecemeal wagons/containers, in partnership with other players, for time-tabled multimodal logistics services end-to-end. Some 100 sections on the network carry little traffic; about 10,000 km of it is highly under-utilised. Optimal utilisation of infrastructure would demand flexibility, autonomy and innovation. The annual loss of more than `1,100 crore on parcel and luggage segment should compel it to forge partnerships with established road network operators/integrators to develop a door-to-door multimodal product. Tectonic changes happening in large railways in US, China and Russia for high velocity, price-competitive overnight inter-city parcel and freight delivery transport systems would be worthy of emulation. The freight terminals/sidings optimisation schemes sporadically pursued need a quick, steady push. Of the 1,300 terminals managed by IR, only 500 handle more than 10 trains per month. These should really be handling each at least one train a day. Redevelopment of selected stations, already initiated, needs a steady push for expeditious fruition.
IR needs to restructure management cadres to be conducive to their functional integration; reform its recruitment and promotion policies that have over years become bizarre; articulate role of finance; and corporatise and privatise manufacture of railway equipment, also construction.
Whereas Railway minister has gone about setting up myriad ‘cells’ for Transformation, Mobility, Environment, et al, the categorical imperative of cost cutting has escaped attention, to raise productivity of assets consistent with newer and costlier gadgets and technologies it inducts. The minister needs to deftly, and firmly, handle the secateurs ?rst in the Kafkaesque Rail Bhawan, then right across the sprawling system—its vast web of installations—some 45 workshops for POH, 100 loco sheds, 260 repair depots and ‘sick lines’, stations and yards, colonies and offices, its 65,000 strong protection force. It’s not railways’ business to run schools, hospitals, or kitchens. Some “empires” contrive to survive, for example, the mammoth 23,325 strong construction organisation, its over-6,000 “work-charged” officers’ posts unduly continuing, not without complicity of finance. IR’s project management is now notorious for huge cost-and-time overruns. IR has had capital infusion of a whopping `3 lakh crore in last three years, results of which remain invisible in terms of expected traffic increases and higher system-wide asset productivity.
It is acknowledged that over 10% of IR’s existing network capacity can be unlocked by ensuring a zero-failure of fixed and mobile assets and, more importantly, enhance safety. But IR’s assets failures, impacting train operations, show a disturbing trend: rail track fractures and weld failures increased from 3,237 in 2015-16 to 3,546 in 2016-17; diesel and electric locomotives failures remained at about the level of 4,500 in the year, and detachment of passenger coaches from trains on run in excess of 810; failures of overhead electric wires increased from 378 in 2015-16 to 447 in 2016-17; signalling equipment failures were of the order of 130,200 in 2016-17.
Transforming an organisation requires clearly articulated aspirations, as well as the ability to generate energy, passion and new ideas. Transformations are about changing not only things but also people.