Reading between the railway tracks: Turnaround plan and the numbers

The Railways’ operating ratio touched 98% in September, and settled in the vicinity of 97% in October. Achieving the target of 88.5% by March looks difficult; and the Railways would do very well to better last year’s 91.8%.

Written by Avishek G Dastidar | Updated: January 12, 2016 8:18 am
People boarding a train at the railway station in Ludhiana, Punjab (Express Photo by Gurmeet Singh) People boarding a train at the railway station in Ludhiana, Punjab (Express Photo by Gurmeet Singh)

The Railway Ministry has sent emails to the public saying 103 promises made in the Railway Budget have been implemented, but the road ahead is “long and winding”. The mail has a brochure, complete with graphical illustrations and a note from Minister Suresh Prabhu that assures that the Railways are on the track to recovery.

While none of the claims can be termed untrue, the ground reality is somewhat more complex. Most vital signs of a commercial organisation are flashing red.

The Railways’ operating ratio touched 98% in September, and settled in the vicinity of 97% in October. Achieving the target of 88.5% by March looks difficult; and the Railways would do very well to better last year’s 91.8%.

By December-end, the Railways had carried just 8 million tonnes more freight than last year. The Budget idea of carrying 85 million tonnes more by March 31, 2016, again looks difficult to achieve. The economy is yet to take off, affecting freight traffic, but the fact is the infrastructure that carrying another 85 million tonnes would need — more wagons, loop lines, line capacity at strategic sections — is far from ready.

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Spending, an indicator of how fast and well the Railways are getting works done, has been much slower than what is needed.

By November, the Railways had spent only 44% of its capital expenditure budget. It has spent only 41% of funds allocated for doubling, a key focus area in Prabhu’s Budget. Spending on traffic facilities, another critical area for aiding network capacity, is just 37%. These, Prabhu had said, were “low hanging fruit”.

In works directly benefitting passengers, the picture has been grim.

Only 28% of the Rs 1,748 crore allocated for works under passenger amenities has been spent so far. The pace of spending on facilities for railway staff has been faster.

The macro-indicators signify two things. First, the transporter is not earning as much as it had projected in Parliament, which means less money for operations, especially for next year when the impact of the 7th Pay Commission — at least Rs 32,000 crore — kicks in. Second, it is not able to get work done as fast as it needs to even when the funds are assured.

The Finance Ministry has taken away Rs 12,000 crore from the gross budgetary support of Rs 40,000 crore, citing “pace of expenditure”. This is exactly the amount of money that the Railways had obtained from Finance citing the need for more investment in Railways to turn things around. But the government has not only slashed funds from this year’s GBS, it has actually decreased central funding when compared to last year. This, when the Railways are committed to the highest-ever Plan size of Rs 1 lakh crore and, as per the turnaround prescription, supposed to commit to more next year.

The Railways have seen the signing of a landmark agreement that will enable LIC to park Rs 1.5 lakh crore with the Railways for five years. But this money is loan tied to projects with high rates of return, whereas the Railways are short of money to run the house. It needs to earn more and spend less, reflected in recent decisions like raising tatkal charges and limiting the scope of refunds on unused tickets.

Prabhu has diagnosed the real ailment of the Indian Railways as under-investment. The Ministry has an advantage here, because unlike other ministries, which are dependent on states to implement policies, the Railways own the implementing agencies, which are zonal railways and construction organisations.

Some significant milestones reached by the Railways have actually been pursued and monitored directly by the PMO. These include the bullet train project and the tenders for the Madhepura-Marhowrah locomotive factories that were awarded last month to Alstom and GE. Other big-ticket ideas, like station development, stress on cleanliness, and various Make in India initiatives, too, are viewed as the PM’s babies.

The decentralisation in Rail Bhawan — “No file should come to the minister,” Prabhu had said soon after taking over — has led to the devolution of most powers involving works and human resource management to the rail bureaucracy, which, critics say, has given already powerful officials greater say in matters of finance and transfers/postings.

After a series of Ministers generally seen to be populist or non-performing under the UPA, the Railways got Prabhu, who brought with himself a lifetime of goodwill and reputation as a doer. While the transformation of the Railways cannot happen overnight, the pace of change appears to be slower than what had been expected.

avishek.dastidar@expressindia.com