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Thursday, April 09, 2020

Indian Railways needs restructuring and modernisation, efforts since 2014 are bearing fruit

Departmentalism is worse than it was in the 1950s. And much worse than it was in 1905, when the Railway Board was formed. However, the Railway Board went through a major change in 1951. It was time for another change in 2019 and HR reform feeds into that.

Written by Bibek Debroy | Updated: January 2, 2020 12:19:12 pm
Gujarat: Rail services hit after goods train derails It was time for another change in 2019 and HR reform feeds into that. (File photo/Representational)

One can quibble about Arthur Cotton and the Red Hill Railroad, built in 1836 but officially, the advent of the railways is dated to April 16, 1853, when a train left Bori Bunder for Thane (then Tannah), with three steam locomotives (Sindh, Sultan and Sahib) pulling it. “The railway-system will therefore become, in India, truly the forerunner of modern industry.” This is something Karl Marx wrote and most people are familiar with this quote. They may not remember where Marx wrote this and when.

The piece was titled “The Future Results of British Rule in India”. He wrote it on July 22, 1853, though it was first published on August 8, 1853. In other words, Marx was probably aware of Bori Bunder to Thane. One can quibble about the way Indian Railways (IR) defines consequential accidents and related deaths. But with that as a constant, 2019-20 is the first time in 166 years (counting from 1853) that there have been zero passenger deaths (so far). This is a vivid example of the modernisation Indian Railways is going through. The Indian Railways set up a committee to examine restructuring. This is often known as the Debroy Committee. It submitted an interim report in March 2015 and a final report in June 2015. These two reports listed more than 20 committees that preceded the Debroy Committee and took stock of their recommendations.

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There was a terminal goal we visualised, as did others. There must be competition and choice. With IRTs (Indian Railways trains, for want of a better word) as a public service provider of railway transport services, there must be private sector entry, with a regulator (say, a development authority). However, because of the way Indian Railways has historically evolved, one can’t simply unbundle existing Indian Railways the way railways have been unbundled in other countries (sometimes unsuccessfully). Instead, one divides existing Indian Railways into a Railway Infrastructure Corporation (RIC) and the new Indian Railways trains. The RIC’s common infrastructure is shared by both Indian Railways trains and private sector providers. The regulator’s role is not merely to set tariffs, but also ensure fair competition (such as access to track) between Indian Railways trains and private operators. The Railway Ministry sets broad policy, the regulator implements the principles of competition determined by that policy and the present Railway Board becomes a corporate board for the Indian Railways trains. Skipping the finer details, this was the terminal goal. As a committee, we decided to focus more on the process, especially human resources and finance. Out of 20-odd committees, other than ours, it was the 1994 Prakash Tandon Committee that explored HR in detail.

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The key ingredients of our reform template were the following: (1) allow private entry, including in running of private trains; (2) change the composition of the Railway Board; (3) decentralise decision-making to zones/divisions and even further below; (4) separate the core functions of running trains from non-core functions like schools and medical services; (5) set up a regulator; (6) unify various railway services; (7) transit to commercial accounting and (8), unite the Railway Budget with the Union Budget.

If one ticks the boxes, for an organisation that is so old and somewhat resistant to change, it is remarkable that so many reforms have been introduced since 2014. Reform (1) has been done and other than royal tourist trains, the Tejas Express is the first private passenger train, running on a pilot basis. Reform (2) has been recently announced, with the Board functionally pruned. Item (3) has been done and (4) is being implemented at the zonal level. Reform (7) has been completed at zonal level and (8) has been done. A clear computation of social costs is a function of (7) and is being carried out throughout the Indian Railways system. This leaves the regulator and unification of services. Recently, eight Group A services have been unified into the Indian Railway Management Service (IRMS). While details are awaited, this will presumably first be done prospectively, for new entrants. Retrospective application will always face more challenges.

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As users of rail services, we often don’t appreciate the silos that exist in the Indian Railways. Think of a station. Who takes care of station amenities? Platforms, drinking water, toilets, waiting rooms and over-bridges are the responsibility of civil engineering. Lights, lifts, escalators, fans and water-coolers are looked after by electrical. Public address systems, departure boards and train indicator boards are the responsibility of telecom. Reservation and ticketing is with commercial (with IT thrown in). Everything on-board (including sockets, fans and lights) is with mechanical. I did say drinking water is the responsibility of civil engineering. But do remember water-coolers are the responsibility of electrical. Within a station, there are tracks, platforms, places where passengers wait, toilets and perhaps even trains that come in. These need to be cleaned. In one station I visited, I counted 17 different cleaning contracts. Have you wondered about the use of hot-cases on trains? Why not microwave ovens? When it was proposed many years ago, there was departmental wrangling between those who looked after electrical and those who looked after utensils, those who looked after procurement and those who looked after catering contracts. Silos, not talking to each other, are common to many organisations. But this is compounded by separate services with separate lines of accountability and encadred posts for vertical mobility. In plain language, there are quotas, with posts reserved for specific services.

Departmentalism is worse than it was in the 1950s. And much worse than it was in 1905, when the Railway Board was formed. However, the Railway Board went through a major change in 1951. It was time for another change in 2019 and HR reform feeds into that.

This article first appeared in the print edition on January 2, 2020 under the title ‘On the reform track’. The writer is chairman, Economic Advisory Council to the PM. Views are personal.

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