Transmogrifying a Behemoth – Railway

It has never been so good for Indian Railways. So it appears images of sleek bullet trains, ‘Vande Bharat’ express trains, Vistadome coaches and ‘Airport Standard’ remodeled stations usually accompany news related to railways these days, the historically record-breaking capital. Periodic reports about investments. High initial freight traffic, and, thankfully, a historically low number of accidents. Paradoxically, this feel-good image makeover is accompanied by a tacit silence on important policy issues, especially those related to financial health and the future management architecture of the Indian Railways.

precarious financial health

Despite a recent stricture passed by the Comptroller and Auditor General of India (C&AG) for attempting to wind up financial data for 2019-20 and 2020-21, to project that the Indian Railways is in the black Is, window dress efforts are ongoing financial statistics. Thus, in the Revised Estimates for 2021-22, against the pension expenditure of ₹52,500 crore, the appropriation to the Pension Fund is limited to ₹49,000 crore. If the appropriation of Pension Fund shows full expenditure, the nominal ‘surplus’ of ₹875 crore would translate into a deficit of ₹2,375 crore, leaving the Indian Railways in the red.

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Again, in the Budget Estimates for 2022-23, an incremental loading of 75 million tonnes has been shown to generate additional revenue of ₹20,000 crore, under ‘freight earnings’; Whereas during 2021-22 (Revised Estimates), an incremental loading of 169.06 million tonnes generated ₹28,044 crore. huge increase in income face to face Physical loading during 2022-23 (Budget Estimates) is not supported by commodity-wise loading data except for an amount of ₹10,000 crore under ‘Miscellaneous Goods Income’, details of which are not available. This determination to project the organization as being financially viable has its background.

identity dilemma

Indian Railways suffers from a dilemma of identity: is it a commercial entity or a government department trying to operate on commercial principles? As the only “earning” department/ministry of the Government of India that fully meets salaries, and (until recently) meets pension obligations of its serving and retired employees from its own earnings, it has always been an outlier. Is. Hence, the pressure to project an image of a PSU which is economically viable is immense. This explains the tendency to mess with financial data.

On the other hand, there is a recent trend that the government is attempting to invest heavily in long-term projects – examples being line doubling and new lines and 100% electrification (not all of which are viable) – heavily financed by institutional/ Market borrowing, it sends a signal that the organization has switched to a policy of heavy investment towards capacity expansion to be in a ready position to meet future traffic needs. Revenue generation, at least in the short run, will therefore, with a sharp reduction in internal resource output, include repayment of loan/lease charges, which are skyrocketing, will be outpaced by working expenses.

The Eighth Pay Commission, which is usually due by around 2025-26, is bound to further impact the finances. The government needs to accept that in the short term, Indian Railways will have to function as a “spending department”. A realistic projection of the financial position will prompt concrete action to reverse the trend within a short time frame. Band-aid measures such as tampering with financial data could result in the Indian Railways turning into another basket case like the former state-owned airline, Air India. Therefore, the investment policy needs to be clearly defined.

The ‘silo-less’ utopia

The lack of a clear policy is evident in another important area: changing the management structure of the Indian Railways. An important decision was taken by the Union Cabinet in December 2019 to do away with the decades-old system of recruiting officers in eight organized ‘Group A’ services (five technical and three non-technical) in Railways through the Combined Engineering Services Examination. . (CES) and the Civil Services Examination (CSE), and instead recruits are made into a single service called the Indian Railway Management Service (IRMS). The direct cause of this tectonic shift was to prevent the scourge of “departmentalism”, which was seen as a hindrance to optimal decision-making and smooth operation of the railways.

After a delay of more than two years, the formation of the IRMS was officially notified on February 9, 2022, followed by the announcement of a reduction of about 40% in the number of ‘Group A’ cadres under the IRMS. More significantly, it was also notified that the recruitment would be through CSE. The purported logic of this surprising decision is that, even now, around 70% of the candidates who qualify CSE are engineers and hence, there is no need to conduct a separate exam for IRMS!

Certain conclusions/consequences emerge from these decisions. First, the Indian Railways is content to recruit its managers (remember, not engineers) to manage technical tasks from a group of engineers who have already decided to pursue careers outside engineering. Second, it is most likely that the recruits will not be among the top rankers in CSE. Third, these “reluctant engineers” may not be available in sufficient numbers, considering that the government still believes that candidates with engineering backgrounds are required to manage technical tasks within the Indian Railways. Finally, with no ‘departmental silos’ and a common seniority, it is possible to imagine a situation where a recruit begins his career managing locomotives and rolling stock, then moves through middle management levels to track, signal and Manages Communications, and then Level in Senior Management, working as Financial Advisor and Human Resource Manager, ending his illustrious career at the top level handling policy matters on operations and business development. No “departmental moss” really a Rolling Stone gathering!

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privatization move

This may almost sound bizarre. Still, there may be a way in this apparent madness. Indian Railways is all set to go for direct privatization in Public Private Partnership (PPP)/Joint Venture (JV) mode or in its core activities like train running, asset maintenance, station management, project management and execution, production units and medical services. , All relevant domain expertise will remain in the private sector, supported by lower level promoted managers and supervisory technical cadres. Research and technical training establishments can be segregated as autonomous institutions. The rest of the Indian Railways will be “managed” by a cadre of free-wheeling managers at the middle and higher levels, who are essentially acting as contract administrators.

This probably explains the unprecedented reduction in the cadre strength of IRMS by about 40% as compared to the cadre strength of the present Group A cadre, i.e. from 8,000 to around 5,000. In fact, it is the beginning of the end for the Indian Railways as we know it today.

It is sad-humor that a matter of fundamental importance – a veritable transformation of the Railways – should, in the absence of a clearly articulated policy, be the subject of second guesses, conjectures and speculations. This position was summed up by a young railway engineering aspirant as follows: “Indian Railways does not seem to need engineers.”

Almost a year ago, his dismay at the ubiquitous hold of the generalist in all spheres of the public sector, on the floor of Parliament with none other than the Prime Minister, had a statement in Hindi: ” babu will do everything, I a s means they got banned Fertilizer factory will also runchemicals factory will also runI a s If it is, then wherever that air will fly, We have made this big argument:?” It can be translated as: ‘Will bureaucrats do everything? Just because they become IAS, does it mean they will run fertilizer factories, chemical industries, if one becomes an IAS, will he Will the plane fly too? What is this enormous power that we have created?’

Which raises the question: what does the government really want?

Of. Balkesari, belonging to the Indian Railway Service of Mechanical Engineers, was a member employee of the Railway Board. E-mail: balakesari_k@hotmail.com