Murmurs to revamp Indian Rlys get louder

With China set to restructure its Railways along commercial lines, a buzz has once again been created to restructure the Indian Railways, a long pending issue.

Most of the railway officials, who Business Line spoke to, voted for restructuring of the Indian Railways’ primarily to improve services. The move will separate services with social obligation such as passenger segment from freight services, which have a commercial intent.

However, only those that are out of the railway system now, are willing to come on record with their views.

Incidentally, many expert committees – such as Prakash Tandon Committee (early 1990s), Rakesh Mohan Committee (2001), Anil Kakodkar (2011) – have called for the restructuring of the Railways from different perspectives.

According to Bloomberg, China’s State Council, the Cabinet, has unveiled a widely-anticipated plan that will split the Ministry of Railways’ administrative and commercial functions. Currently, the ministry both regulates and operates China’s rail system, which has impeded both competition and financing.

The break-up of the railway ministry, burdened with 2.66 trillion yuan ($427 billion) of liabilities, is part of a broader government restructuring to curb state intervention, improve accountability and the division of power, according to the report.

“Restructuring Indian Railways can be delayed as long as people want to continue with an inefficient system. If services have to be improved, railways have to be restructured along different lines of business,” said a Ministry official, unwilling to be quoted.

The present system of organising Railways along departmental lines – electrical, mechanical, traffic, engineering, finance – is just not fit for customer-oriented service provision.

“Structural change of the Indian Railways system is a must. The present system can deliver day-to-day functioning, but it can’t deliver fast. At the going rate of pending projects, and capacity crunch, what will happen after five years,” said Vivek Sahai, former Railway Board Chairman. The manner in which it can be restructured needs to be carefully studied, said Sahai.

“Separating Railway Ministry as infrastructure owner, from operations is a must. Like Railways in Europe, services could be segregated along freight, passenger business. And within passenger business, there could be long distance, suburban services,” said Sumant Chak, Director-International Relations, Asian Institute of Transport Development. Chak is former Additional Member, Railway Board.

“I am a votary of segregating the core and non-core business of railways. Manufacturing, maintenance activities should be segregated. Moreover, policy and regulatory function should be separated from operations,” echoed J.P. Batra, former Railway Board Chairman.

Restructuring the behemoth – Indian Railways is the largest employer with 14 lakh employees – requires a strong political will. “The Unions will also have to be taken on Board,” said Batra.

“In Europe, European Union had mandated restructuring of the Railways, and separation of infrastructure from operating firms,” said Chak.

SMALL STEPS

“But, there has to be a push from within. Railway officials is to explain politicians why restructuring is imperative,” said another official.

Global experience shows that Railways re-structuring takes long. “Railway Ministry can at least start with some small steps, which will ultimately lead towards this end,” said Sahai.

“There was an ADB-funded project to do accounting reforms in Indian Railways. The report lies unimplemented. Costs have to be segregated along different business units, may be on generally accepted accounting principles,” said Chak.

A regulator – to look into tariffs and costs — is another key step. In fact, pressure on the Indian Railways to come clean with its extent of cross-subsidisation has increased in the backdrop of private investors riding on the system. Association of Container Train Operators – a lobby body of investors in container trains – has already demanded a rail tariff regulator.

mamuni.das@thehindu.co.in

http://www.thehindubusinessline.com/todays-paper/tp-logistics/murmurs-to-revamp-indian-rlys-get-louder/article4498334.ece

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