Priorities of Shri Suresh Prabhu Hon’ble Minister for Railways

The railway ministry has become a hot seat. With the prime minister emphasising the modernisation of rail infrastructure, there is renewed pressure to deliver. The Narendra Modi government wants the Indian Railways (IR) to be at the vanguard of the change envisaged for the country. So, incremental growth for the IR will not suffice — it needs a metamorphosis.

In his first press briefing, the new railway minister, Suresh Prabhu, outlined his priorities: passenger safety and customer satisfaction. Improving safety requires the replacement and modernisation of railway assets. Customer satisfaction is a more complex goal. First, it requires the creation of extra capacity to satisfy unmet demand for passenger and freight services. Second, the IR needs to become cleaner, faster and more comfortable. This calls for a quantum jump in capital, as well as revenue expenditure. It also requires a break from the past in policy and process.

The railway bureaucracy, renowned for its diligence, has been accused of being intransigent and lethargic. But the political leadership is more to blame for a lack of vision and commitment. In the past, but for a few honourable exceptions, the IR was treated as a fiefdom and milked for political ends. Fortunately, the present political dispensation seems determined to set things right. There are no quick fixes, however, and a consistent long-term vision with measurable milestones should be the basis of any strategy to transform the railways.

First, the IR needs to streamline its policymaking process to plan and handle transformative changes. Despite constraints, the IR performs well in its core job of train operations over a huge, creaking network. It has a disciplined, skilled workforce of more than 1.3 million with a stellar industrial relations record. It boasts a rich talent pool of civil servants and engineers. There is no reason it cannot deliver higher standards in safety, speed, cleanliness and courtesy. However, its top policymaking body, the Railway Board, is unwieldy and riven with turf wars. It needs to be restructured to be more effective in spearheading policy changes. The key objective should be to make the board work as a cohesive unit in the interest of the country. There is also a big reservoir of technical and managerial talent within the organisation that should be tapped.

Second, there is an urgent need for massive capital investment in rail infrastructure and services. It has been about two decades since the IR first invited the private sector to invest in rail infrastructure and rolling stock. Most such investment involves railway lines linking the IR network to ports, with the ports facing a Hobson’s choice of funding rail links for their own survival. There are some private companies operating container trains and they have a litany of complaints against the rail administration. Basically, private sector participation in railways has been lukewarm at best.

Much of the external funding to the IR has been facilitated by the government through budgetary support, market borrowings and World Bank/ Japan Bank loans. This is not unique to India. The world over, most rail infrastructure is directly or indirectly funded by governments, especially for passenger services. However, private industry has played a big role in the development and production of locomotives, rolling stock and a variety of equipment. Unfortunately, in India, the private sector was permitted to play only a fringe role.
The Indian government also did not invest much in railways, which has led to a stagnation in terms of network expansion and modernisation.

Though there is no commitment to increase the budgetary support for modernisation, the Modi government has allowed 100 per cent FDI in rail infrastructure and rolling stock, with the hope of bringing in new technology and management practices, along with investment.

Could this be a gamechanger?

Though the new policy opens up a potentially huge and untapped railway market to foreign as well as collaborating domestic companies, there is also much apprehension. For rail infrastructure, the IR would be the licensor, operator and the regulator. Similarly, for the manufacturing industries, the IR would be the main buyer. So, the government must create an independent omnibus rail regulator to ensure coordination, standardisation and fair play. Rail regulation is a complex and evolving area due to vexatious day-to-day operational and timetabling issues, besides tariffs and access charges. The regulator has to safeguard and balance the interests of investors, customers, operators, the government and the public. Along the lines of the British rail regulator, it can also be entrusted with the preparation and approval of model concession agreements to instil more confidence in investors.

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