It is, of course, true that the Indian Railways incur around Rs 30,000 crore annually by way of subsidies to passengers and, to the extent this is paid from the central budget, its finances will be better.
Railway minister Suresh Prabhu is right in arguing that unless the Railway Board is revamped, it is going to be difficult for the organization to become viable. It is, of course, true that the Indian Railways incur around Rs 30,000 crore annually by way of subsidies to passengers and, to the extent this is paid from the central budget, its finances will be better. The problem, however, is more deep-seated given the huge funds required for both fixing the safety aspects of the network as well as expanding it – in any case, it cannot be anyone’s case that all subsidies can be removed within just one year. In FY17, for instance, the Rs 40,000 crore or thereabouts that the Railways will need to spend due to the Seventh Pay Commission – in a full year, the amount is Rs 32,000 crore but this becomes due from January 2016 – could kick the operating ratio to the 97-98% levels, leaving the transporter little funds for investment; even this year’s target ratio of 88.8% is likely to be breached since there has been a large shortfall in revenues already. It is to get a sharper focus that Prabhu has written to Railway Board Members about, asking them for suggestions in the next two weeks on how to revamp the structure of the Board.
With such large tracts of land and commercial space within stations, and on trains, non-fare revenues should comprise at least 30% of the Railway revenues – this is the number former Railway minister Dinesh Trivedi was aiming for, in keeping with the Japanese railway – but these are miniscule right now. But, and here’s the problem, were the Railways to contract advertising rights to a company in the manner the BCCI does with telecast rights for cricket matches, that company would have to deal the engineering department for permission to advertise on the railway platforms, with the electrical department so as to get connections for back-lit kiosks/billboards and the mechanical department if the advertising has to be taken on to trains. While Dinesh Trivedi had talked about a Member PPP to get over these kind of troubles, with 13 services within the Railways, many powerful departments function as independent silos, so it is not clear if this would have been the solution. After Suresh Prabhu spoke of the need to create dual-traction locomotives that could run on diesel where the tracks were not electrified, for instance, the battle between two wings of the ministry ensured the pilot project for 10 such locos was split between the diesel and electrical locomotive plants.
If the Railways is to able to meet changing consumer needs – apart from freight, even its share of short-haul passenger traffic is falling – it needs to be a lot more dynamic and that means each department – represented by powerful Members in the Railway Board – needs to work together. As Prabhu has said in his letter to the Board, “any theme that requires us to collaborate has languished … increase in average speeds, integrated use of Information Techology, integrated planning, etc”. Few successful organizations the world over function in silos, indeed while the Railways may want to preserve their 13 different services in order to impart some degree of specialization, after a certain level of seniority, people have to be free to move across branches; most important, the Board has to be flexible enough so as to allow a quick organizational response to changes in customer demands/preferences.