Changing track

Updated on: Dec 06, 2021

Rain hits Mumbai (A file photo) | Photo Credit: FRANCIS MASCARENHAS

Indian Railways needs to manage its transition to a PPP model carefully

Since the Budget, there have been a series of developments pointing to a rapid process of transition in Indian Railways, the fourth largest rail organisation in the world in terms of the length of the rail network and the largest in terms of the number of employees (an estimated 13 lakh). First, the Centre wants to merge and corporatise the rolling stock entities such as the locomotive units, wheel and axle plant and coach factories, some seven production facilities in all. Second, it has been reported that entire ‘train sets’ of EMUs and MEMUs will be produced by private players. Finally, zonal railway officers have reportedly been asked to draw up a list of employees who will turn 55 or complete 30 years of service by the first quarter of 2020; this is with a view to identifying candidates for premature retirement in order to reduce the workforce to 10 lakh by 2020. Seen along with the Budget announcement “to use Public-Private Partnership to unleash faster development and completion of tracks, rolling stock manufacturing and delivery of passenger freight services”, the plan that emerges is of the Centre contemplating higher private investment in hi-tech areas such as the high speed freight corridor, while turning IR into a ‘lean and mean’ entity. With its parlous operating ratio and sluggish freight and passenger revenues, IR is reliant on institutional funds and market borrowings, apart from budgetary resources, to fund its annual capital expenditure of ₹1.5-1.6 lakh crore. Whether its funds constraint is a result of overstaffed manpower or other inefficiencies is a moot point. While rationalising the workforce, safety issues arising from the shortage of trackmen and loco pilots should not be overlooked.

The plan to invite private investment seems aimed at substituting imports in the area of diesel and electric locos, telecom equipment, track monitoring equipment and signalling. For instance, almost three-fourths of the 5,500 Horse Power diesel-electric locomotive produced in DLW Varanasi has imported components. Companies from the world over — Europe, the US, Japan, China and South Korea — are eyeing a share in India’s railways market. Hopefully, the Railways will adopt the China model — of ensuring local manufacturing, developing a local ecosystem for sourcing, and ensuring technology transfer within a stipulated time — as it embarks on procuring locomotives through JVs.

While India seems to be emulating China in managing its rolling stock operations, it should be noted that China managed to ensure successful technology transfer to emerge as a global player in rail infrastructure. It is somewhat ironic that the push to reform production facilities comes soon after Integral Coach Factory’s indigenous production of Train 18, at under ₹100 crore a rake. While tendering processes have come under question, the existing technological skills of IR should not be disregarded in the push to modernise.

Published on July 29, 2019
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