Background
In the White paper presented by the Hon’ble
Minister of Railways (MR) in 2014, it was highlighted that in the preceding 64
years Freight Loading had increased by 1344% and Passenger KM by 1642%, whereas
Route KM had increased by just 23%. Years of under investment were responsible
for the overstretched and over-stressed infrastructure to such an extent that
over 60% of the routes are being utilised beyond 100% of their capacity. The
challenge confronting the Railways is enormous, and having identified it the
enormity, IR in 2014 decided to undertake massive investments for expansion and
rejuvenation of the network, improvement of passenger amenities and adopting a
customer focused approach, embarking on a medium term plan entailing an
expenditure of Rs. 8,56,000 crores. This investment has been sourced from the
General Budgetary Support (GBS), Internal Generation and Extra Budgetary
Resources in the form of market borrowings by the Indian Railway Finance
Corporation (IRFC), Institutional Financing and through Public Private
Participation (PPP) in IR projects. Concerns have been expressed regarding the increasing
burden of debt servicing and low growth in traffic and earnings.
The Think Tank recommendations are
enumerated in the succeeding paragraphs.
Finacial Aspects
IR’s Finances should comprise a judicious
mix of Revenue surplus (Internal Generation) to the extent of 25-30% of the
Annual Infrastructure Plan, GBS to the tune 30% with the remaining being raised
via market borrowings and PPP.
Railways must prioritise projects to be
financed through debt to those that can be completed in less than 36 months and
result in a clear increase in top line revenues.
Railways must not borrow for
non-remunerative projects like remote area connectivity, defence lines etc.
unless GBS supports complete debt financing.
Railways have a huge shelf size of stagnant projects for which the following action
should be taken :-
- Freeze stagnant/ongoing works not required for throughput enhancement – works that have low or even negative internal rate of return (IRR).
- Reduce shelf of active and remunerative projects to a level that can be funded on an assured basis, having regard to the capacity for construction in the economy.
Tariff Rationalization
- Altering the Traffic Mix Carried. Traffic mix carried on IR needs to be altered. No stream of passenger traffic (except Rajdhani etc.) breaks even. Therefore, barring Suburban sections in selected cities, IR needs to start weaning away from short/medium distance passenger traffic (this could be handled by the roadways). Railways should retain only long distance passenger traffic while resorting to tariff rationalization, namely increasing passenger fares over short and medium distances.
- Revising Passenger Tariffs. Passengers tariffs are very low, recovering only around 50% of the cost incurred. Passenger fares should be revised upward regularly, to offset inflation at least. The upward revision in passenger fares should be progressive, in succeeding budgets and not left to the Railway Development Authority. (In the Electricity sector, despite provisions in the Indian Electricity Act 2003, State Regulatory Commissions have not been able to remove major distortions in electricity tariffs for over a decade).
- Reduction of Freight Tariffs. Freight tariffs to be reduced appropriately. This would enable Railways to win back traffic from the road sector and make the organization vibrant, subsisting on volumes.
PPP. For financing via the PPP route, IR
needs to make the investment remunerative and viable in the eyes of investors
through selection of robust projects with a credible and healthy IRR with
strong and steady cash flows. Railways should also create a Risk Assessment and
Risk Mitigation framework by providing Government Guarantees and securities in
the form of charge on the assets being created. Avoid ‘big brother’ attitude and
provide level playing field to the Private investors with risk being shared by
both, the IR and private players.
Railways must think of disinvestment to
raise resources. Production units may be auctioned in part or full. As a first
step Production units may be converted to Public Sector Undertakings (PSUs)
under Ministry of Railways.
Reduce the unit cost of transportation by
better productivity and generating capacity. Mission of raising average speed
of goods train to 50 kmph and Passenger Trains to 80 kmph to be pursued
vigorously. Payload to tare weight ratio should be improved by introducing
modern wagons.
IR could leverage its physical asset base
to raise very significant amount of funds, like sale and lease back of assets
(other than land) and sale of equity in selected Central Public Sector
Enterprises (CPSEs).
To contain Energy costs, IR should make
substantial investments in power generation to secure the advantage of ‘Deemed
Licensee’ and lower tariff.
Automation of Ticket Checking &
Reservation
- Ticket Checking. IR incurs recurring revenues losses on account of ticketless travel. Ticket checking methods are outdated and manual. Metro type entry and exit can be provided at stations for blocking of unauthorised passengers. Also, provide metro type electronic card/ tickets for Suburban services.
- Managing Reserved Tickets. All ticket checking staff to be provided with hand held ticket checking equipment. Passengers with reserved seats to be checked by ticket checking staff with hand held devices and main frame computer updated. Ticket checking, cancellation and allotment of seats should be through these devices at the stations as well as on the trains. In this way substantial recurring leakage of revenue due to manual allotment would be checked.
Improving Passenger Amenities & Enhancing Passenger Experience
General. Passenger Amenities and
Experience. After the 2018 budget, the Railway Minister, stated that he has a
vision – “to transform the IR into the most preferred mode of transportation by
the people of India by 2022”. Safety and Passenger Amenities would continue to
be the focus areas. In every budget there is an emphasis on improving passenger
amenities. However, budgetary provision in the past has been very meagre to
make a perceptible ‘dent and feel’ among the customers. Lately, there has been
a substantial increase in the allocation under this head and a quantum
improvement in ‘Passenger amenities and Passenger delight’ is expected. The
criterion for classification of stations for the provision and scale of
passenger amenities has been recently revised from earnings only to earnings
and footfall. Works are being undertaken for station redevelopment at more than
600 stations besides other Passenger amenities. Recommendations to reinforce
the efforts of IR to enhance Passenger delight are enumerated in the following
paragraphs.
Additional General Class Trains. Run
additional General class trains, introducing a new sitting class of reserved
travel, with a charge for reservation and new classification. This will enhance
the passenger delight of the very large number of passengers who travel in
General class unreserved over long distances - a nightmarish experience. (The
option of reserved sitting accommodation in second class on long distance trains
is not available at present.)
Reintroduce AC chair cars on long distance
trains like erstwhile AC chair car in Rajdhani and Deluxe trains. This would
increase capacity, earnings and passenger satisfaction.
Introduce a concept of ‘Computer Generated
Clone trains’ depending on the size of the waiting list. Passengers will get a
confirmed ticket on these trains. The concept of special trains can then be
given up, because their capacity is not fully utilised due to ignorance of
customers who normally look for listed trains.
Double Decker trains have not been
successful due to problem of dust and high fares. They can be introduced and
replicated with fare structure on marginal costing. It will add to the capacity
of trains.
Punctuality of trains has been deteriorating
and seems to have been given the back seat. Punctuality of trains is an index
of efficient operations as well as passenger satisfaction and delight. Efforts
should be made to make the punctuality of trains a sacrosanct goal for all
concerned.
Provide washed and fully watered rakes at
originating stations. There is a perpetual shortage of water in coaching depots
and as a result rakes are not washed as per standards except Premier trains.
Water conservation / Recycling plants have to be made essential part of
coaching depots.
Bio toilets have proliferated in a big way
on non-premium trains and there is an ambitious program to equip all coaches
with them. The efficacy of bio toilets is not yet established and there is a
talk of stench emanating from them and their getting clogged on account of
foreign material thrown into them by passengers. There is a need to make a
midway evaluation in respect of the Bio toilets (which digest human waste by
anaerobic bacteria) by an independent agency, before proceeding with their
further installation and choosing between them and vacuum toilets, which are
proven and in service with foreign railways.
Cleanliness at stations should be under the
charge of one agency only and not multiple agencies as at present. Modern Mechanised
systems should be used with measurable indicators of cleanliness like shine
index. It should be a unified, outsourced system which not only looks at
cleanliness but also maintenance of public interface area including
electrical/mechanical/ electronic fittings and equipment.
Display Inside Coaches of Running Trains.
Each coach to be provided with an internal LED display Board, which displays
the current status of the train and any other vital information to be conveyed
to the passengers.
Parcel traffic by regular trains causes
hindrance to passenger movement on platforms. It sometimes causes loss of
punctuality due to delay in loading / unloading. Parcel trolleys cause damage
to the platform surface. Parcel special trains should be run from Parcel
terminals / Platforms. CONCOR to take lead in aggregating parcel traffic and
providing last mile connectivity.
Manpower Planning (Human Resource)
General. Staff strength of IR was 13.08
lakhs in March 2017. There are more than 2 lakh vacancies in Groups C & D.
More than 1 lakh are said to be in safety categories. IR has recently embarked
upon a massive recruitment drive to fill up 93,357 vacancies, mostly in safety
categories like Trackman, Gateman, Loco Pilots and technicians etc. Average wage of group C & D staff is
about Rs 8.83 lakhs/yr. Large scale
induction of staff will result in additional expenditure to the order of Rs
9000 crores, annually. It may lead to a further deterioration in the already
compromised Operating Ratio and calls for innovative and revolutionary steps to
contain staff costs. Recommendations in respect of man power in IR are given in
the succeeding paragraphs.
Manpower. While as per authorization the
shortage of manpower is to the tune of 2 lakhs, there is no requirement of
filling up many of these vacancies on account of introduction of new
technologies and computerisation in the IR. Comparative study should be carried
out by the IR to understand its staffing pattern vis-a-vis foreign railways.
Prima facie it appears that IR is overstaffed as compared to its counterpart
foreign railways.
Yardsticks / Norms for Staff. Yardsticks /
norms for staff need to be reviewed. Despite introduction of new technologies
and changeover from manual maintenance to mechanised maintenance systems, there
has been no significant reduction in manpower yardsticks. For practically all
activities, IR has a yardstick/norm for manpower required. There is an urgent
need for reviewing these norms. It can be done by entrusting the task to some
reputed consultants like Deloitte, Ernst and Young etc. It is also pertinent to
mention that in earlier times a substantial portion of work such as track
renewal, sleeper renewal, upgrading the signalling system etc. was done
departmentally. Today most of these activities, other than very basic
maintenance, are done through contractors. Manpower yardstick should be
reviewed periodically. Requirement of staff be worked out on zero basis.
Computerisation. With growing levels of
computerisation, there is a strong case for reducing clerical staff,
stenographers, helpers etc. In all disciplines a fresh look at manpower needs
to be taken with a view to identifying areas having surplus staff.
Core Function. There is need for the IR to
focus on its core function of transportation. Activities such as manufacturing,
maintenance of residential estates, hospitals, schools could be corporatized or
out sourced. Outsourcing of some maintenance could also be considered as is the
practice in several countries, for example in Japan the Railway Companies
outsource maintenance functions to certain group companies.
Skill Development. Railways followed a
practice of attaching helpers to technicians with on the Job learning, the
norm. It is considered that for proper skill development, specialised training
is necessary. This can be imparted in IR’s own workshop/ training centres to teach
helpers the skills of their choice like electrician, plumber, mechanic, mason,
welder signal maintainer etc. After successful completion a competency
certificate should be issued. Upon occurrence of vacancies such trained staff
could be selected based on competence certificate without conducting a further
trade test.
Recruitment Boards. Presently, project
surplus casual labour forms bulk of the base for induction at the entry level.
There is a requirement of instituting recruitment for entry level staff by
Special Recruitment Boards on the lines of Army Recruitment Boards.
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