India’s largest public utility Railways is witnessing a major transformation—from improvement in customer service via Twitter, quick tendering of large projects, massive capex to realization of the ambitious Bullet Train project. Bloomberg TV India caught up with Railways Minister Suresh Prabhu to get a perspective of how the transition is taking place amid economic slowdown. The next Railway Budget will carry forward reforms initiated in 2015, Prabhu said.

There is an upsurge in Twitter of photos of clean stations and you are responding to people’s request on Twitter. What does this imply on customer service and overall operations of Railways?

Railways is a commercial organisation rendering service to the people. How can a service provider not be sensitive to the problem of the people? My foremost focus in the Budget is to make this organisation efficient, transparent and customer-friendly. We have customers for freight and 2.7 crore daily passengers. So, we created a central cell which will monitor complaints on a real-time basis. I started with myself.

We need to socialise, because if there is no socialisation we cannot expect this to go on for a longer period of time. Each and every general manager and DRM are on twitter, which is compulsory and most of them are really active today.

The complaint has to be addressed at the place where the complainant is at that point of time.

Second, we are giving the general managers so much power for execution of contract, operations, for tendering – this is revolutionary. So I am creating key result areas for each and every functionary in the railways – the GM, DRM and station masters. With responsibility comes accountability.

India is among the few countries in the world that are now proceeding ahead with the bullet train project. What kind of economic benefits do you expect?

Let us not look at bullet train as a standalone project with Japan. Look at it as a comprehensive partnership between the two countries. We expanded our partnership to cover areas like enhancing and upgrading the existing infrastructure of railways.

For the first time, it has been incorporated in the collaboration of Japan and India that is increasing the safety standard of the Railways. As you know we do not have a very commendable record of safety here compared to Japan.

We are also increasing our cooperation on research between Japanese railways with India’s Research Design and Standards Organisation (RDSO) based in Lucknow. You cannot imagine the spin-off benefit from this cooperation.

There are two things that spur growth to catch up with the developed world.

First is connectivity and second is speed. Connectivity is there but if speed is not there it doesn’t help. Both have to go hand-in-hand. Our Prime Minister has launched so many programs with the road, air and port connectivity, and digital connectivity and also through railways. The railway network has to expand not physically but it also must have speed. To get speed you need technology.

Something like this happened in China over the last 15-20 years and it is now the single largest owner of a high-speed network. Small industry located far away can now do business with the major cities in China because of the connectivity. The viability study was started by the previous government. It was decided much earlier that we should first connect Mumbai and Ahmedabad because they are two commercial centres.

Japan International Cooperation Agency (JICA) spent huge time on a viability study and they found it extremely viable. At the same time, we are not using our money at all. This is going to happen from very soft term finance probably unheard of before – 50 years moratorium at 0.1 per cent interest and 85 per cent of that would probably be made in India.

What about operating expenditure of Railways on bullet train project? What about fares? There are criticisms about how funds are not being utilised in upgrading the existing network and now Railways is venturing on the ₹98,000-crore bullet train project.

This entire money is not coming out of the Railway Budget. So if this project is not there, this money is not available. If money is not available where is the question of using that money somewhere else? Japanese have agreed to also look at other sectors. So some more money will come into these sectors, which otherwise would not have come.

The technology would not have come into those sectors. The JICA report said this is a viable project because of the fares that is going to come out of this.

What will be the fare of bullet train?

The fare will be a little lower than the air fare and enough number of people will be able to travel.

When do you expect the Mumbai-Ahmedabad bullet train project to be completed?

About 7 years from now.

We learn that Railways may fall short of Budget target by 7.5-10 per cent in revenues during FY16. Is this an indicator of overall tepid economic environment or is this railway-specific concern?

Almost 2/3rd of the revenue of railways comes from bulk cargo – steel, cement, coal, iron ore and others. Demand for steel is flat – to produce one tonne of steel you have to transport 5 tonnes of iron ore. Both would have been transported by Railways.

Imports and exports numbers are down because of global economy but it is affecting Railways as well. This is completely external to the Railways.

Shortfall in revenue from passenger traffic is marginal but the significant drop is in freight cargo. This is an area of concern but completely out of our control.

How much does it limit your options with regard to freight rate hike?

This is something where quantity is the problem. Other problem is Pay Commission, which is going to put tremendous pressure on Railways finances as it would result in ₹30,000-32,000 crore annual increase in railways cost.

These two are major challenges for the railways and both are external to Railways.

We have put the entire Railway department into marketing mode for the first time. I also tried to do cost control – we are working on reducing cost of energy as it is second highest expenditure after pension and salaries.

We have made significant gains. I did open market biding. We are buying power from Dabhol, doing energy audits and energy efficiency operations and switching to solar.

All of this will help cut cost by at least ₹5,000 crore.

The Railways Budget targeted to reduce operating ratio (OR) to 88.5 per cent in FY16 against 91.8 per cent in FY15, which is the best in the last 9 years. What is your expectation on that?

We will have to wait for the next three months. It will not definitely be what I would have liked it to be. It is going to be higher than that.

What is the direction of your forthcoming Budget going to be?

Whatever I said in the last Budget speech, I have converted it into accessible points – 110 of those are implemented and others are under implementation.

We are making a transformative accounting system, which is at an advanced stage. We are trying to create regulatory framework and the draft is ready. I had prepared a White Paper and presented to the Parliament before the Budget. I have also presented a 5-year perspective. I think we should not completely delink this Budget from the previous one.

There is a five-year cycle so we do not have to come out necessarily with a bombastic idea. We will definitely try to move forward but there has to be continuity and a phase of consolidation.

The problem with Railways is that we have started too many projects but many are in a very early stage of completion and the investment is also not yielding any results. This is not a right thing to do. So we must complete all the projects that were announced and are under implementation before we start doing something exceptionally different. We have the money, so we are revamping the system.

We aim to complete all the projects but it will take time. The next Budget will be a continuation of what we started last year. I think it will contain something more, which I will like to talk about at the end of February.

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