The Hindu Business Line : Indian, Chinese Railways: On parallel tracks

THOUGH reform measures in China and India are not always comparable, there are many similarities and differences, especially when it comes to monolithic, government-run organisations. The contrasts were evident at the World Bank conference. The Bank sponsored an exchange of officials between the Indian Railways (IR) and the China Railways (CR), following a visit to China of a six-member delegation led by the IR Board Additional Member (Finance), Ms Geeta Thoopal.

The objectives of the IR team's visit to China included a comparative study of the CR's systems and problems. Though the team visited China this year, the data it garnered relate to 2003-04.

An asset parallel reveals that while CR has a standard 1,435 mm gauge width, IR has a 1,676 mm broad gauge. China's route kilometres add up to 73,002 against India's 63,221, with China having electrified 30 per cent of its route kilometres (18,060 km) to India's 28.8 per cent (16,960 km). The CR has 40.8 per cent (24,650 km) double line against the IR's 25.7 per cent (16,281 km).

The CR has 16,320 locomotives (of which 11,355 are diesel loco) against India's 7,817 (of which 4,769 are diesel). The CR has 5,10,327 wagons compared to IR's 2,28,170 . But in number of coaches the IR (35,772) seems to be relatively closer to the CR (40,487).

In a presentation, the IR officials said that the Chinese field staff reported "high reliability of assets, lack of speed restrictions and very few failures, continuous technology upgradation, and very high standards of maintenance."

Speaking of continuous technology upgradation, one is reminded of the ruckus created by the IR's efforts to procure high-speed diesel locomotives from the Swedish giant ABB during the early 1990s.

The CR is buying 300 locos from EMD, US.

These high HP (horse power) locos have 16-cylinder EMD engine AC traction drive systems with power rating 4.47 mw (6000 HP). Its passenger locos have 10,000 HP (5000x 2 twin unit), against the IR locos' horse-power of 2600-4000. The CR locos fuel tank capacity of 7500 litres x 2 allows them to cover over 1,200 km, non-stop.

In terms of traffic, the CR hauled 2,212 million tonnes of freight against the IR's 557 million tonnes. The productivity (net tonne kilometre plus passenger kilometre per employee) was 1,452 for CR and 686 for IR, the reason being Chinese intensive use of assets on the mainline and remarkable dedicated freight corridors.

The Indian team conceded that reform objectives of both the railways were analogous in that they sought to increase capacity for freight and passengers, improve efficiency of transport operations by reducing unit costs of train operation, and compete effectively with other modes, particularly in passenger and multi-modal businesses.

But the difference is that the CR's plan distinguishes itself with a long-term mission as well as dynamic response to the changing of needs of rail users.

The Chinese government treats the CR as a separate financial entity and permits it to retain all profits for use as employee bonus and investments after payment of income-tax. It has also set up a diversified economy programme to provide employment to surplus staff when it absorbed four lakh employees.

The Rakesh Mohan Committee that went into the restructuring of the IR proposed a slew of measures, including separating the core business of the railways from its non-core activities and retrenchment of surplus staff or letting the natural attrition not refilled by recruitment unless absolutely essential. But the IR has not meaningfully responded to these rationalisation measures. If China can ensure high labour productivity by redeployment of surplus staff so can the IR.

It is not for nothing that the Expert Group on IR, led by Dr Rakesh Mohan, in July 2001, bluntly but pithily remarked: "The business-as-usual low growth will rapidly drive IR to fatal bankruptcy and in 16 years, the Government of India will be saddled with an additional financial liability of over Rs 61,000 crore. On a pure operating level, IR is in a terminal debt trap."

It is also instructive to note the major railway reforms launched by the CR as the Chinese government streamlined the Ministry structure seven years ago by cutting down from 23 to 16 departments.

Moreover, all activities — infrastructure, rolling stock, and train operation — were consolidated under the Transportation Department, which ensured better control and coordination of rail operation at 18 locations.

This was followed by separation of non-core activities (1997-2004) when the CR transferred major activities, such as railway engineering, civil construction, telecom and signal construction, and rolling stock manufacture to the State Large Scale Enterprise Working Committee. In 2004, container, special goods transport, postal and luggage services of the CR were set up as separate companies. Global investors have been invited to develop 18 major rail container terminals, provide rolling stock and multi-modal services (estimated investment of $2.5 billion).

In crucial areas, the CR took concrete steps towards separation of passenger and freight businesses. The passenger business was separated on accounting basis and held responsible for profitability. The CR also pays for the common services it utilises. What is astounding is that the CR plans to invest over $250 billion, to be financed by itself through borrowings and Special Purpose Vehicles (SPVs) to mobilise private investments.

Already, a construction surcharge at 30 per cent is levied, and customers pay more for better comfort and higher speed. Even pass fares were raised substantially in the busy season by 20 per cent to cover cost.

Every year between 1990-2003 freight was increased 4.7 per cent. Set against this, the IR has on an overall basis been making losses on passenger services (excluding Electric Multiple Unit), as was admitted by the Minister of State of Railways, Mr R. Velu, in the Lok Sabha.

He said that the losses incurred on this score were Rs 3,850 crore in 2000-01 and Rs 4,246 crore in 2002-03. Revision of passenger fares could not be undertaken for the last couple of years as successive Railway Ministers found it politically untenable.

As such, the loss on this score to the system could be worse than what it was a few years ago.

While making a presentation at the World Bank Conference on "Current Initiatives in Railway Management in India and China," on November 21, the Officer on Special Duty, Mr Sudhir Kumar, spoke of "a turnaround story" with the "rustic brilliance" of the Railway Minister, Mr Lalu Prasad.

If only the Railways would apply its wisdom to the system, it would emerge a stronger and financially more sustainable mode of transport before long, though it may be a while before it matches the magnitude and momentum of its Chinese counterpart.

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