Jaitley to Railways: focus on performance, not populism

A month and a half ahead of presenting the country’s first combined General and Railway Budget, Finance Minister Arun Jaitley indicated that the Railways must shift its focus from populism to performance.

Jaitley also called for a transparent accounting system for Railways and outsourcing some of its non-core functions such as hospitality services.

“Railways got caught in a battle where populism prevailed over performance,” he said here on Tuesday at a conference on accounting reforms in Railways.

Noting that the basic principle of running a commercial establishment is that consumers must pay for the service they receive, Jaitley said, “We have turned this model upside down in Railways.”

He further noted that Railway Budgets in the past focussed on populist measures such as new trains and said that these are not principles on which the country’s largest establishment can operate.

“Such announcements must make way for the creation of an organisation that provides world class services…the focus should be on the quality of infrastructure, world class railway stations,” he said.

Jaitley also stressed that unless the Railways manages to improve its performance and internal management, there will be pressure and competition from other sectors such as roadways and airlines in both passenger and cargo transportation.

“The core competence of Railways is to drive trains. Hospitality may not be the core competence of the Railways and therefore, what is not within its core competence, the principle of outsourcing — which is accepted world over — can be a logical addition to those activities of Railways,” Jaitley said.

He also stressed that the Railways’ performance must be reflected in its accounts. “Your accounting systems really must reveal more instead of concealing the reality. What is the kind of investment in infrastructure that is coming in, what is the kind of investment in railway safety, what is the kind of outcome of outlay that you have planned, I think those accounts must really reflect the reality,” he said.

The Railways plans to move to accrual based accounting from cash accounting.

For transparent accounting Addressing the conference, which was jointly organised by the Ministry of Railways and CII, Railway Minister Suresh Prabhu also stressed on the need to improve the accounting system and ensure that outcomes can be tracked to inputs.

“We are trying to move into integrated activities, wherein we start with the Budget and end with the outcome,” he said.

He noted that transparent and efficient accounting will enhance the profitability and improve overall efficiency of the Railways.