Track record

Corporatisation is the new buzzword in government these days. And in discussion is ‘corporatisation’ of government-owned entities, including the Railways, the nation’s economic lifeline.

In 2001, detailing the route taken by some major world railways, the Rakesh Mohan committee had found a few common guiding principles which India could adopt. These included creating an arms-length relationship between the railways and the government; inducting management with commercial skills to create customer-focused organisations and defining an appropriate business focus, while spinning off non-core businesses.

It’s in the genes Railways began in India over 180 years ago as private companies incorporated in the UK. After Independence, ten such large private companies, 30 princely state railways and other small private companies were re-organised into seven zones to become the Indian Railways. Thus a ‘corporate’ culture with strong financial controls and a stress on performance has been in its genes, which has stood the test of time despite the poor political leadership it suffered over the last two decades.

Moreover, unlike a government department, the organisation is run not by babus but by technocrats and professionals — a 10,000-strong pool of technical and managerial talent joins various streams of the railway service.

Most importantly, the Railways is a dynamic organisation. Trains have to be run come hell or high water, with operational decisions being made every minute to keep 6,000 commuter, 11,000 long distance and 7,000 goods trains on the move.

Hence, indefinitely postponing policy decisions is not an option, and given the long gestation periods, projects need to be completed without any cost or time overruns. Two decades ago, far-reaching technology and managerial innovations were carried out under the leadership of Madhavrao Scindia. A world class passenger reservation system and scores of ‘super-fast’ inter-city trains such as the Shatabdis were introduced during his tenure.

A number of non-core activities were also hived off into separate corporations to sustain the Railways’ growth.

Those that run well Container Corporation of India has captured more than half the exim traffic, IRCTC has made e-ticket booking easy; it issues over a million tickets a day in peak season. Railtel (Railway Telecom Consultancy Services) with its over 42,000 km of optical fibre network connects major cities, earning in 2012-13 a profit of ₹143 crore on an income of ₹435 crore. It will soon be an internet service provider) through ‘Railwire’, targeting a user base of 175 million by 2017 and 600 million by 2020, covering almost all villages.

Both Indian Railway Construction Corporation and Rail India Techno-Economic Services have earned precious foreign exchange by carrying out international projects. Since its creation about a decade ago, Rail Vikas Nigam Ltd. has so far completed over Rs. 11,000 crore worth of projects creating additional line capacity.

However, the vital issue in corporatisation of the Railways is, should it become a commercial entity or continue to be a vehicle for economic and social growth? Moreover, an ownership structure that gives government-nominated directors unbridled power without accountability, while professionals running the corporation are held responsible for the results is hardly the way to go.

The problem is not about who is the owner but whether the owner is will take responsibility.

( The writer is a former member of Railway Board)

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