Railways looking to shift to growth track

The performance of the Indian Railways over the last few decades has left many analysts and experts concerned about its future. During the six years (2014-15 to 2019-20) before Covid-19 struck, the Railways’ freight traffic recorded a dismal 1.65 per cent CAGR; passenger business fared still worse, clocking (-) 1.28 per cent. And particularly worrisome has been the Railways’ working expenses, which galloped at more than twice the pace of its revenue receipts – the former rising at 2.92 per cent CAGR in these six years, and the latter at just 1.37 per cent.

But putting the past behind, the Railways seems buoyant and has set a challenging target of 1,700 million tonne (mt) of freight loading in FY 2023 – 20 per cent higher than the goods loaded in 2021-22 (1,418 mt), and 15 per cent more than the budget estimate (1,485 mt) announced in February.

It is looking to scale new heights by adding 90,000 wagons in the next three years, and readying high speed (160 km/h) freight EMUs.

Targeting a 45 per cent modal share in the nation’s freight market in 2031, up from current 26-27 per cent, the Railways has just floated tenders for bids by private industry players to manufacture, maintain and lease 1,200 electric 9,000 hp locomotives at its Dahod workshop in Gujarat, and another 800 electric 12,000 hp locos at Varanasi (earlier Diesel Locomotive Works).

The much delayed dedicated freight corridors (DFCs-East and West), slated to be commissioned within 2022-23, are expected to yield unprecedented gains in productivity and efficiency in terms of asset utilisation, reduction in transit time of goods as well as unit cost of operation.

Budget 2022-23 provided for 400 next-gen Vande Bharat trains. Private entrepreneurs have been invited to build 200 of these train-sets at an estimated Rs 26,000 crore at ICF in Chennai and Latur. A further lot of 200 aluminium-bodied Vande Bharat trains, with still newer refinements, is contemplated to be similarly procured.

Kavach, the indigenously developed train collision avoidance system that is comparable to world’s best, has been tested and is to be used at all high density corridors.

Post the Covid-19 onslaught, the Railways has an opportunity to adapt to a new paradigm. The few unique milestones achieved in the ongoing year, and some more expected to soon come its way, may well mark an inflection point for the Railways to reassert itself.

Steps to be taken

The Railways, however, needs to take some steps to achieve this. First, it must make clear its identity as that of a public corporate entity with responsibility to carry the nation’s freight and passengers efficiently and economically.

Second, its passenger services are in dire need of improvement. This requires the management to segregate the freight and passenger services, and managing them as two separate business streams.

Third, the Railways must cut costs, streamline its structure, amalgamate/realign its system-wide installations – offices, workshops, sheds, depots, and yards, even departments – and minimise its headcount. Paradoxically, the Railways keeps adding to its bloated manpower.

Fourth, it must transform its investment regime and improve project management. An endemic problem persists — that of time and cost-overruns. Scarce resources have been spread thin on scattered projects, providing little tangible relief on congested routes or terminals.

Fifth, like in the Army, the Railways must devise a system to assign senior ‘command’ posts (DRMs, GMs and Members) to only those who are duly trained and experienced for frontline responsibilities, involving production, operation and marketing of rail-based logistics business. Inexplicably, officers confined to ‘back-office’ functions for most of their career are catapulted to senior management positions.

And, most importantly, the Railways must re-orient and rationalise its passenger and freight businesses. It may focus only on the core segment of inter-city travel, speedily building a network of semi high-speed (160-200 km/h) inter-city passenger services to grow exponentially, enabling customers get confirmed accommodation on demand; discourage/disincentivise short distance (less than 70-100 km) rail journeys done on regional/ordinary trains.

The Railways’ primary obligation is to re-engineer rail freight business, its bread and butter, by optimising all bulk freight transport and creating critical mass of wagons/containers carrying piecemeal general goods in train loads.

As it negotiates some sharp, tortuous corners, the Railways’ seasoned operators are known to always rise to the occasion and deliver the nation’s goods, especially when confronted with arduous challenges amidst difficult circumstances.

The writer is a former Managing Director, Container Corporation of India

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