With an annual turnover of Rs 1.4 lakh crore and a staff strength of a staggering 1.4 million people, the Indian Railways (IR) has the dubious reputation of being subject to a raft of Committees and Commissions that periodically went into its functioning to identify the faults so as to fix them by making it a board-managed corporate entity at least within the given constraints of being a government-run company! However, successive political masters remained impervious to any market- savvy strategy to reform the largest mode of public transport in Asia displayed excessive zest not to relent in their fiefdom which they use it as a means to enjoy a merry-go-ride with little responsibility for the resultant stagnation and distinct lack of progress.

A point to ponder is that despite liberalization of the economy and part-privatization of some non-core area of activities in the railways, the upshot has not been commensurate with even modest expectations. On the other hand, the safety standards in the system do not provide any comfort to the travelling public; nor are the sanitary conditions in and around the stations and within the train bring any modicum of hope for cleanliness and healthy stay during the sojourn with the food served being the most unwholesome even in prestigious cross-country super fast trains.

For the user industry the system remains pathetically outmoded and it is small wonder that the road transport has edged past the railways in terms of haulage of materials. With diesel prices going down, the competition from the road is bound to be brisk and the railways run the risk of losing more share to the former if it does not get its act together to improve the way it is dealing with freight users and passengers, both of whom get frightened by the lackluster service they get instead of the value for their money.

Given the fact that the diesel which constitutes around 70 per cent of its total fuel bill showed a price decline of a hefty fall from Rs 60.08 a litre in June last to Rs 50 now meant the savings could be deployed to improve the basic amenities of the users of the system and the forthcoming budget should at least take some baby steps in this regard.

Undoubtedly, the Indian Railways (IR) remains by far one of the world’s largest networks with 65,436 route kilometers of route spanning the length and breadth of a continental country of India’s size and serving as a crucial nexus and linchpin locomotive for the movement of men and materials. IR run 12,617 trains to carry 23 million passengers per day connecting more than 7172 stations spread across the sub-continent. It hauls more than 7241 freight trains carrying about three million tonnes of freight every day. For the IR, there is not any dearth of report dealing about its multi-faceted functions over the years so much so that the system is cluttered with suggestions and recommendations most of which remained pigeonholed for want of purposeful political backing and a competent team of professionally -run management.

In fact, more than a decade ago, the Expert Group on Policy Imperatives for Reinvention & Growth headed by a distinguished transport economist Dr.Rakesh Mohan who subsequently became Deputy Governor, RBI, had suggested the functioning of the IR on commercial lines. The Mohan Committee of 2001 as well as Expert Group on Modernization of Indian Railways headed by Mr. Sam Pitroda as recently as 2012 had recommended setting up a Railways Tariff Regulatory Authority to fix fares, both passenger and freight, in consonance with ground realities and competitive pressures being exerted by other modes of transport so that there would be a fair element of rationality, reasonableness and reality inbuilt in the rickety finances of the railways. But it was only in January 2014 the previous Government approved RTA as an interim body, while the new government appointed Bibek Debroy Committee recently suggested in its report modalities for implementing the existing Cabinet decision on setting up a RTA! So much headway in deciding a regulator for the system!
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The overarching need for aligning cost to service assumes grave importance in the light of a raft of damning reports by the Comptroller and Auditor General of India (CAG). The CAG report on Railways Finances laid in Parliament in December last rapped the management for “not following its own rules and regulations laid down in the Financial Code and Engineering Code for efficient execution of projects and for proper accounting of financial transactions”. Taking a serious note of accounting subterfuges, it gave the instance of how a positive balance in Capital Fund was compassed in2012-13 by “diverting payment of lease charges to IRFC (Indian Railways Financial Corporation) from Capital Fund to Capital received as general budgetary support from the Government of India”. This obviously deprived the Railways of the additional investments that could have been made on other capital works, including maintenance of rolling stocks to keep the system spic and span. It is altogether another unedifying saga that how the IRFC set up as the borrowing vehicle to run the system has become an albatross around the Railways’ neck over the years as its interest rate is aligned to market rates.

According to another CAG report on the management of goods trains, the Railways disbursed a massive Rs 10,349.14 crore (Rs 4299.21 crore for wagons and Rs 6049.93 crore for locos) during 2008-2103 for payments towards principal component of lease charges to IRFC. What is rather disconcerting is that this payment which was made from Capital Fund till 2011-12 and thereafter payment of Rs 5514 crore was made from capital for which the Railways had incurred additional dividend liability of Rs 221 crore.

Going forward, a reputed auditor himself, Mr. Prabhu should not let any such manifest mistakes to dress up the brittle finances of the system when he presents the Rail Budget on February 26 in Parliament but instead chart a refreshingly new course with service to stakeholders as his mantra and mission. (IPA Service)