Herculean task before new railway minister

An uphill task! With its operating ratio hovering around 92 per cent, the Indian Railways (IR) has only 8 paise left out of every rupee earned to finance its growth, and as a result, is perennially starved for finance, seeking annual hand outs from the central exchequer!

At the last count, 406  projects ranging from multi-crore new lines to track doubling, electrification, gage conversion and world class stations
to more mundane ROBs (Road/Rail Over Bridges), FOBs (Foot Over Bridges),  conversion of un-manned to  manned level crossings etc, estimated to cost a  whopping Rs. 1.85 lakh crore were stuck in the pipe line.

A ‘White Paper’ on railway projects was issued as early as in July, 1998 by then railway minister Nitish Kumar in a bold attempt to place on record the dilemma faced by him in the execution of  a long list of 395 projects sanctioned by his predecessors and estimated to cost a whopping Rs 35,000 crores. More than 80 per cent of these were financially unviable and his pleas to discuss these with the stake holders and have some of them dropped, fell on deaf years.

Reportedly, new Railway Minister Suresh Prabhu now proposes to give the matter another try, meeting the MPs in seven batches over dinner during the current Parliament session. Though MPs may agree to some sort of priority being drawn up in the execution of  these projects spread over the 17 railway zones, it is highly unlikely that they would accept even a single project being dropped, as it would tantamount to committing political ‘hara-kiri’!

Prabhu also has to fulfill a long wish list ranging from high-tech and undoubtedly high cost ‘Bullet’ trains, `world class stations’ to the more routine facilities such as providing wi-fi on  Superfast trains etc and may  have to opt for FDI and PPP routes to bring some of these expensive ventures to life.

The 500 km-long Ahmedabad-Mumbai corridor with ‘Bullet’ train whizzing past the bucolic countryside on elevated line at 300 kmph would cost
a humongous Rs. 60,000 crore. Moreover, it will require high passenger volumes to make it viable, not a safe bet when airlines are offering cut-throat competition even on short haul routes.

Greater delegation of power to undertake most of the commercial decisions, tendering for civil engineering projects, purchase of rail related equipment etc, is also engaging his attention. If he has his way, operating level echelons – general managers (GM) of zonal railways, production units and other similar entities would now be charged with all tendering matters which presently need the minister’s nod.

To put his idea into practice, Prabhu has now commissioned services of former Delhi Metro chief E Shreedharan to head a one man committee to suggest a system and procedure ensuring proper accountability and transparency at the GM and other functionaries’ level for taking all commercial decisions including that of tendering. He will also be required to prepare a manual of instructions, and a suitable Management Information System (MIS) to ensure a time bound disposal of the cases.

A host of other urgent issues such as safety, punctuality, security etc would also need the minister’s immediate attention, as would a constant barrage of  requests from the batch of brand new MPs and MLAs demanding new passenger trains, new lines to develop backward areas, road and rail over-bridges  etc. Undoubtedly he will have to first attempt to extricate the nation’s largest and most critical piece of infrastructure from the very deep fiscal hole his predecessors have buried it into over the last two decades or so with hundreds of populist financially unviable projects and ventures.

Passenger tariff

The dilemma of according priority to passenger or freight will time and again present before him and it would be helpful if he realises early in the game that carrying passengers is a losing proposition. A decade long freeze on passenger tariff by successive rail ministers before him has made matters worse.

For IR, the unit of business and operation is a train load, whether it is carrying 1500 passenger or 3500 tonne of freight. There are about 11,000 long distance, 6,000 suburban passenger carrying trains while only 6,000 trains carry freight – in all, 23,000 originating daily on its over 64,000 km network.

The bread winner – freight – earns almost 2/3rds of revenue while passenger trains lose money, a common world wide phenomenon. Suresh Prabhu will hopefully try to improve IR’s bottom line by placing a cap on this losing business what with the passenger volumes already peaking out and allow the profitable freight business more room to grow on the highly crowded tracks.

Speeding up completion of the western and eastern legs of the Dedicated Freight Corridor, new lines to evacuate much needed coal, improved port connectivity, doubling etc, would enhance Railway’s capability for carrying freight helping it to reach 2 billion tonne a  year within the next one decade, providing transport at the lowest possible unit cost and becoming once again nation’s engine for economic growth!

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