Signal for Railways: Modernise or Perish

Sam Pitroda,adviser to the Prime Minister,and Anil Kakodkar,former chairman of the Atomic Energy Commission,have offered sage advise to modernise the Railways and make travel safe for 23 million commuters everyday.The recommendations of two independent panels chaired by them,if implemented,can save Indian Railways from going the Air India way.Pitrodas team is spot on when it says that Railways could become a burden on the national economy if it is not operationally and financially sound.It has to spend around.5.6 lakh crore over the next five years to modernise and gain financial strength.Thats not small change,but feasible if money can be raised through innovative ways.Tucked away in the report is a suggestion to impose a modernisation surcharge on passenger fares.

Kakodkars group on safety too has voiced concern over the deteriorating financial health of the vital infrastructure and recommended a safety cess on passenger fares.Perhaps a composite surcharge makes sense,considering that safety and modernisation are really two sides of the same coin.However,Railways must ensure that the money is not frittered away on populist measures like new lines.Unlike other expert groups in the past,Pitrodas panel has not said why railway finances are in a mess.Nor has it recommended an increase in passenger fares that have remained unchanged for over eight years now.Instead,the focus is on prescriptions: the Railways should modernise rapidly,invest more in safety,raise productivity,leverage advanced technology and revamp its organisational structure to make a meaningful contribution to the economy.Some of these recommendations also featured in the panel chaired by Rakesh Mohan over a decade ago,but remained on paper as there was no political will to implement reforms.

The Pitroda panel candidly admits that the task is complex and requires political will,organisational and management support,substantial funding,new direction,new thinking,mobilisation of resources,innovative public-private partnership (PPP) and new business models,and a lot more.Reforms are needed on many fronts to bring finances to a better shape and make the Railways play its role in globalising the countrys transport infrastructure.The goals modernising core revenue-generating assets such as rolling stock,signalling,tracks and bridges and also exploring new revenue models including use of land and airspace,dedicated freight corridors and high-speed trains make sense.So is the plan to upgrade nearly 40% of the tracks that carry 80% of traffic.It would help the Railways haul heavier freight trains and raise speed of passenger trains,improving overall efficiency,safety and quality of service.Investment depends on railway finances.

The Pitroda panel is betting big on PPPs and use of land and commercial space.But given the poor track record in PPPs,a review of the policy framework is in order.Similarly,not much headway has been made in leveraging land and airspace.Here,the panels suggestions that include mapping railway land,ensuring land rights of the Railways and enlisting support from state governments are worth pursuing.Commercial space should be leased out to private developers in a big way.Railway minister and Trinamool Congress member Dinesh Trivedi should start implementing the groups recommendations from this years rail budget.One,he should announce missions in over a dozen focus areas,with clear goals,measurable milestones and defined timetables.Two,the Railways must end the practice of freight and upper-class passengers subsidising lower-class fares.So,lower-class fares must be raised.Three,the railways should break new ground in freight and also spend more money to buy rolling stock,invest in electrification,track renewals and electronic signalling for high-speed operations.Four,it should make the accounting system more transparent.This will end the scope for window-dressing of accounts to show a better balance-sheet.Five,the Railways should also announce reorganisation of the Board to ensure that its chairman functions like a CEO of a commercial enterprise.Six,the Railways can also announce a plan to reorganise itself into separate companies: one can own and operate rolling stock and another can own,say,tracks.Competition among them will improve profits and,perhaps,obviate the need for a rail tariff regulatory authority.Finally,the Centre must offer generous budget support for the Railways to invest in modernisation and safety.There can be no compromise on safety.However,Mr Trivedi needs to convince his boss and Trinamool Congress leader Mamata Banerjee to ensure that Pitrodas recommendations are not dumped.Reforms in railways brook no delay.

Published in: on March 3, 2012 at 8:44 am  Leave a Comment  
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