Vinayak Chatterjee: Ready action points for railways

Three clear reform-oriented reports show the path ahead for the sector 

Pawan Bansal taking over the railway ministry, and not a representative of the “allies”, has raised hopes that the United Progressive Alliance government may be at last getting serious about railways. With this appointment, the railways are back with the Congress party after 17 years. The last Congress railway minister was Jaffer Sharieff. He was followed by Messrs Paswan, Nitish Kumar, Lalu Prasad, Mamata Banerjee, Dinesh Trivedi and Mukul Roy. At one point, there was a speculation that the prime minister may himself keep the portfolio and get the Prime Minister’s Office and the Planning Commission to directly interact with the Railway Board and push the reform agenda.

There was a brief period, under Lalu Yadav’s watch, when Indian Railways did indeed attempt to transform itself from near bankruptcy to post a Rs 25,000 crore annual cash surplus in 2008. However, this “turnaround” was often viewed with a degree of suspicion that it was no “real” improvement but an astute play on increased axle-loads, clever rejigging of commodity freight rates, and creative accounting. It is also clear that post-Lalu, Indian Railways has once again lost its sizzle, and turnaround economics and Harvard and IIMA (Indian Institute of Management Ahmedabad) case studies have faded away to be replaced with numbers pregnant with serious apprehensions. Moreover, compared to other sub-continental nations, India’s road-rail mix is getting far too skewed towards road with all the consequential downsides.
The new railway minister has three well thought-through reports to immediately convert into an action agenda. They are:

• The Rakesh Mohan Committee Report submitted in 2002
• The report by the high-level safety review committee submitted in February 2012 (referred to as the Kakodkar Committee Report), and
• The Report of the Expert Group for Modernisation of Indian Railways — under the chairmanship of Sam Pitroda. (Disclosure: The author was a member of this expert group.)

Individually and collectively, these three reports provide a bed-rock of well-argued reform initiatives that need to be rolled out like there was no tomorrow.
The Rakesh Mohan Committee suggested, a decade ago, that Indian Railways must eventually be corporatised into the Indian Railways Corporation ( IRC). The government would need to set up an Indian Rail Regulatory Authority ( IRRA), which would be necessary to regulate IRC’s activities as a monopoly supplier of rail services. IRRA was necessary to distance IRC from the government. IRC would be governed by a reconstituted Indian Railways Executive Board ( IREB). The government should be in charge of setting policy direction and constituting IRRA and IREB.
The report suggested that once the broad framework of a proposed restructuring is accepted, the Government of India and the railway ministry would need to set up a special task force to frame new legislation enabling a new organisational framework. This task force would have to commence operations with a thorough review of the Indian Railways Act and the Indian Railway Board Act. New legislation would need to be drafted so that it:

• Mandated corporatisation of the Indian Railways into IRC
• Permitted a revamp of the Railway Board
• Redefined the relationship between the government and a revamped IREB
• Provided for exemption from taxation (excise, sales tax, and so on) for the period of transition, say five to seven years
• Permitted private participation in railway operations
• Facilitated the induction of personnel form outside the railways
• Mandated the subsidisation of social responsibilities to the extent of funds provided by the government
• Set up a social safety net to take care of surplus labour

The committee report had pointed out in 2002 with much anguish that: “Indian Railways over the past decade has fallen into a vicious cycle of under investment, mis-allocation of scarce resources, increasing indebtedness, poor customer service and rapidly deteriorating economics. The root cause of the decade of decline is an unstable political system increasingly driven by short-term political compulsions.”
All this was quite path-breaking, and politically, ahead of its time. Succinct and hard-hitting with a bold reform agenda, it was little wonder that the entire railway establishment took great pains to distance itself from it and put it into cold storage. Still, few can argue against its call for a separation of roles into policy, regulatory and management functions.
The report of the high-level safety review committee under the Chairmanship of Anil Kakodkar was submitted in February 2012. The Kakodkar Committee has made a slew of recommendations of which some of the key ones are:

• Stopping the practice of introduction of new trains without commensurate inputs to the infrastructure
• Having a statutory Railway Safety Authority and measures to strengthen the present Railway Safety Commission to undertake meaningful regulatory inspections
• Setting up a Railway Research and Development Council at the apex level directly under the government. This council should have Advance Railway Research Institute and five railway research centres for key safety-related railway disciplines
• Adoption of an advanced signalling system based on continuous track circuiting and cab signalling similar to European train control system Level-II
• Total elimination of all level crossings (manned and unmanned) within five years

To “modernise” Indian Railways, the Pitroda Committee suggested five strategic planks. They are modernisation of core assets, exploration of new revenue models, review and assessment of capital projects sanctioned and work-in-process, focus on enablers and mobilisation of resources.
Based on this five-pronged strategy “15 focus areas” were identified and selected for attention.
 

MODERNISATION GRID: 15 FOCUS AREAS
Core assets	Track and  bridges	Signalling	Rolling stock	Stations and  terminals
Revenue models	PPPs	Land	Dedicated freight corridors	High speed trains
Projects	Review of existing and proposed projects
Enablers	ICT	Indigenous development		Safety
Resources	Funding	Human resources		Organisation

The Pitroda Committee strongly recommended the “mission mode” approach for all these 15 focus areas with clear objectives, measurable milestones, tangible deliveries and well-defined timelines. To achieve these modernisation objectives, the committee outlined an investment requirement of Rs 8.39 lakh crore during the 12th Plan period.
Thus, these three reports together provide an actionable agenda for action. The biggest strength of Indian Railways has always been its well-knit cadre of recognised technocrats, who have been fiercely loyal to the institution. The time has come to use this strength and reform the institution with courageous and visionary political will and acumen.