Financial Daily from THE HINDU group of publications
Friday, Jul 19, 2002
Logistics - Railways
The zonal railway bazaar
R. C. Acharya
ONCE again the Railways has proved itself to be the ultimate milch cow. For the beneficiary States, the seven new zones announced by the Railway Minister, Mr Nitish Kumar, will be a perennial source of jobs, contracts, and other incomes. It is the same piece of cake which is now going to be distributed over a larger area and, in the process, would end up lining the pockets of a larger number of individuals.
With a one-time expenditure of over Rs 500 crore and a recurring annual expense of Rs 50 crore for each new zone, the Railways will be the ultimate loser, as it does not envisage much increase in new passenger or freight business. New office buildings, housing, hospitals, schools and other infrastructure associated with the setting up new railway zones can hardly be categorised as productive assets.
But why is no one complaining? For one, the rail men themselves appear to be quite content with the windfall of new posts seven at the general manager level, scores of heads of department and other supporting staff. This will undoubtedly open up promotion prospects too, something which the railway unions are not very happy about.
Unfortunately, it is the political leadership that has failed to get the long-term view while assuming responsibility for guiding the fate of this 1.7-million-strong behemoth. Armed with their own set of extra-constitutional advisers and throwing caution to the winds, they merrily spent scarce resources on populist projects over the past decade. In the early 1990s, Mr Jaffer Sharief set in motion the `unigauge' project. Hundreds of crores of rupees have been spent, but the project is nowhere near completion. Taking over the reigns, Mr Nitish Kumar is credited with informing the Lok Sabha about the sorry state of Railway finances in his `White Paper on Railway projects in August 1998'. But now he seems to think that an additional Rs 500 crore is small change compared with the Rs 35,000-crore worth of project backlog.
The creation of six new zones was the brainchild of Mr Ram Vilas Paswan, who mooted it in 1996. Barring the Hajipur zone, none of the others faced any controversy or expected major road blocks. The H. C. Sarin Committee report of 1985 was the peg on which Mr Paswan had chosen to hang his proposal, which he announced soon after assuming charge as Railway Minister.
However, the Sarin Committee saw reorganisation basically as a means to improve productivity and efficiency. Aware of the complexities involved, it recommended the formation of only four new zones. The implementation was to be spread over three phases, with Phase I involving the creation of only two zones.
The Committee was emphatic that ethnic, linguistic, territorial or such other considerations should not be taken into account while considering the formation of new zones/divisions and reorganising territorial jurisdiction of the existing ones.
It also noted that such an exercise would be hugely expensive and that every possible effort should be made to keep the number of additional zones/divisions to the minimum. Mr Paswan's proposal lay dormant for six years and everyone thought it had been buried for good. But, for reasons known only to Mr Nitish Kumar, it has been revived in full.
Based largely on State boundaries, the likely reallocation of all important divisions pursuant to the formation of new zones has not generated much resistance from the beneficiary States except West Bengal, where not only the Eastern but also the bluechip South Eastern Railways are headquartered.
The Eastern Railway would now be left with just four divisions Howrah, Sealdah, Malda and Asansol losing Mughalsarai, Danapur and the all-important Dhanbad, the top commercial district which has already been lost to Jharkhand.
Faced with a further loss of prestige and influence, the political forces in West Bengal have asked for a reconsideration.
Undoubtedly, the seven beneficiary States are overjoyed at joining the league of other major States having zonal railway headquarters. Local politicians are already eyeing the prospects of large-scale induction of personnel, hopefully from their own constituencies.
As a bonus, creation of power centres within the State in a Central Government undertaking would not be unwelcome either.
This exercise is bound to upset the have-not States, including, among others, Gujarat and Punjab, the major economic and political powerhouses. Soon, Haryana, Uttranchal, J&K and Manipur and Kerala may clamour for divisional headquarters, if not a new zone.In the past decade, the Railways has been struggling to reduce its bloated workforce, improve productivity, upgrade technology, and so on, to remain competitive vis-à-vis the road sector whose market share for freight has jumped from 20 per cent to about 80 per cent over the past five decades.
And, the recent steep fall in airfare threatens to wean away the well-heeled, putting into question the viability of running the Rajdhani.
Undoubtedly, the Railway Board and the zonal railways will be working overtime to identify staff for transfer, issue posting orders, organise transfers of assets, and so on.
They will have to brace themselves for an avalanche of paperwork which the new zones would undoubtedly generate.
However, the Sarin Committee's objective requiring redistribution of staff and other support infrastructure from the existing zonal systems from which the new zones are proposed to be carved out is likely to remain unachieved.
The question, therefore, is not whether such an exercise of re-organisation is inescapable, but on whether the Railways can afford the luxury of investing in a whole lot of facilities that will be required.
Unfortunately, it is the common man who will end up paying for this purely populist measure, through the annual ritual of enhanced freight tariffs and passenger fares, otherwise known as the Railway Budget.
(The author is a former Member Mechanical Railway Board.)
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