Railways running out of steam

With poor management of finances and safety standards and a series of accidents involving loss of lives and property, the Indian railway system is in a terrible mess. It is paying a heavy price for the spate of populist measures introduced by successive railway ministers, including the announcement of new passenger trains every year at the cost of freight movement and passenger safety.

The much needed reform of the railways remains suspended with only ambitious announcements from time to time relating to high-speed trains, world class stations, dedicated freight corridors, and so on.

For years together, there have been instances when this monolith did not have a full-time Minister and the system had to run almost on auto-pilot.

POOR SAFETY RECORD

The safety record of the Indian Railways has been abysmal. During the decade 2001-11, there were 2,431 rail accidents, including 120 collisions and 1,410 derailments with death toll crossing 1,000. Human error was said to be the major cause in most of the accidents as the Railways failed to provide improved facilities for the running staff and to upgrade training facilities.

The Comptroller and Auditor General (CAG) of India had lamented in its report for 2010-11 that the Railways were not able to fill all the safety category vacancies.

The over-used tracks and stressed train crew were the cause of several accidents on heavily used train routes. There is also over-congestion on certain sections.

The CAG has also been critical about the on-going Corporate Safety Plan (2003-13) of the Railways with a fund outlay of Rs.31,835 crore as the Railways could not fully achieve the target of phase I that was completed in 2008.

It failed to provide the facilities at level crossings for road users' safety etc. The targets for replacement of over-aged locomotives, technological improvement on maintenance of tracks and bridges etc. also could not be achieved.

As Mr R. C. Acharya, a former Member (Mechanical) of the Railway Board, has pointed out, successive rail ministers over the last decade have committed huge financial resources for hundreds of unviable projects, starving the railways of funds for replacing over-aged assets while introducing hundreds of new trains, crowding out the profit-making freight business.

After the series of recent accidents, the Railway Minister, Mr. Dinesh Trivedi, in typical knee-jerk fashion, set up a new railway accident committee, the fifth in as many decades.

Instead, it would have been worthwhile reviewing the fate of the recommendations made by the earlier committees. According to railway sources, the various safety-related works would require around Rs70,000 crore.

FINANCIAL BANKRUPTCY

After prolonged dithering on implementing the much-needed tariff reforms and augmenting internal reserves to generate the investments needed to augment capacities and implement safety measures, the Indian Railways now finds itself in a state of financial bankruptcy. The cash reserves with the system have now dropped to Rs 75 lakh from Rs 39,412 crore accumulated in the five years to 2008-09.

Unfortunately, persisting on the populist track, successive railway ministers have left passenger tariffs untouched for eight years in a row despite rising operating costs and with scant regard for the mounting deficits in the system.

The operating ratio of the railway, which was brought down to 75.9 in 2007-08, is now inching close to 100 and the system is expected to incur a loss during the current fiscal.

In a report placed before Parliament on August 5 this year, the Comptroller and Auditor General (CAG) recommended a review of passenger fare structure to ensure that pricing does not result in a below the cost return. The CAG suggested rationalisation of freight and passenger tariffs through some form of pre-determined non-discretionary inflation-indexing.

Recently, in an unprecedented move, railway employees have voiced their support for an across-the-board increase in train fares to strengthen the financial position of the country's largest public utility. For they fear that, hamstrung by the populist policies of successive ministers, the system could go the Air India way and may default in paying salaries.

TIME TO CHANGE TRACK

Clearly, it is time for the Indian Railways to shun the populist track. Basic housekeeping and upgradation and modernisation of infrastructure and services should receive top priority.

With huge increases in salaries and pensions of railway employees following the implementation of the Sixth Pay Commission Report, serious efforts are needed to improve the productivity of railway employees.

According to reports, the worsening situation has now forced the Railway Ministry to look for external advice to stop it from plunging into a deeper crisis. It is understood that the non-executive chairman of HDFC, Mr Deepak Parikh, is set to be roped in by the Railway Ministry to head a committee to rectify the Railways' deteriorating finances.

However, this is not the first time the Railways is going in for a panel to improve its financial health. Way back in 2001, a committee was appointed under the chairmanship of the former Deputy Governor of Reserve Bank of India, Dr Rakesh Mohan. But the recommendations of that panel on running the railways on commercial lines still remain on paper, even after a decade. What is needed is the political will to improve the situation.

COMMENT NOW