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Indian Railways: Silent Steps to Reform
Source: business-standard.com
Source Date: Monday, April 07, 2014
Focus: Institution and HR Management
Country: India
Created: Apr 09, 2014

A friend once told me, if you wish to break a wall, there are two ways to it. Take a bulldozer and crush it in one go. If you can’t afford a bulldozer, buy a small hammer and start hitting on the cement that joins the bricks. One day the wall will fall by a mere push.

          

By analogy, Indian Railways seems to be hammering its way on the path to reform since it can’t bulldoze due to political compulsions. It is soon expected that train tickets could be expensive by few rupees at the physical counters much like the air tickets. And this development is not just about the expansion of internet and e-commerce but is also indicative of a larger silent process of reform that is underway in Indian Railways.

A variety of expert committees including the White Paper on Indian Railways have suggested a thorough reform of Indian Railways-especially that of the Railway Board. Key recommendations from across committees have been asking for diluting powers of the Railway Board, corporatizing the Railways under the Company’s Act like China, setting up a tariff board for rationalizing freight and passenger fares. But the fundamental question of ‘how’ remains to be answered.

But one can’t expect a revolution. Some Railway Minister will stand up to ‘revolutionise’ the functioning of the ministry and the Cabinet will oblige him. Political compulsions have rallied against reform in Indian Railways and will continue to do so. There is no rational for justifying the separate Rail budget other than the fact that we are following a British convention. The colonial power laid special emphasis on the Railway and network expansion for tapping the resources of the country. And like many others, the tradition has persisted without questions.

The tradition has been exploited for political advantages-Announcing unfeasible projects in home state of the Railway Minister, without checking on the fund reserve laying ambitious plans for new lines and trains. And the result is that Indian Railways currently has a backlog of projects over Rs one lakh crore.

But the silver lining is that there is a silent bureaucracy at work that is pushing step by step reform of the country’s largest employer. Passenger fare hike has moved out the Rail budget, making the procedure more rational and immune from electoral populism. The introduction of fuel adjustment component that would hedge the fuel price hike with freight rate was for the first time applied for passenger fares, though Railways is still absorbing majority of the losses on passenger side.

Premium trains introduced this year whose fares start with base tatkal fare and move along the demand curve is another reform step that boldly attempts to serve the demand and is not shy to earn few extra bucks, quite contrary to Railways traditional thinking of ‘social responsibility’.

And soon Railway ticketing would move largely online and special cess would be introduced at the physical counters and that is an indirect way of increasing fares. And all of this happened when the Railways had no uniform political leadership for four years. The Ministry had six Railway Ministers in the span of six years, indicative of the bureaucracy that is pushing the reforms.

But the resistance is not unfound. After much tiff between the Planning Commission and Indian Railways, the proposal of Plan Com found its way and the Rail Tariff Authority, pending an amendment in the Railways Act, 1989- will be a regulatory one armed with full powers to decide freight and passenger fares. An interim advisory body should be constituted by the year end.

Recently, a high level committee under Rakesh Mohan suggested that without the development of Indian Railways the required to boost to manufacturing sector and economy is impossible. Various experts have forecasted that the next big revolution is waiting to happen in the Indian Railways. And it wouldn’t be an Arab Spring but rather an tiring bureaucratic process full of resistance and drudgery.

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