Vijay Kumar Gaba: Indian Railway

Saturday, August 28, 2021

Rewriting History

Once there was a tyrant feudal lord. He would oppress his subjects using all the means within his power. He would often torture them; force them serve to his cause; plunder their assets; abuse their women and children; violate their traditions and culture and exploit their lands to his benefit.

Once he learnt that one of the traders in his village posses large amount of gold and precious stones. He immediately summoned the trader to his palace and ordered him to surrender all his wealth to his Lordship. The trader refused to obey the orders arguing that the wealth is the reward of the hard work done by him and his ancestors, and only his children have the right to own it.

The Lord got furious and ordered his muscleman to beat the trader black & blue and lock him in the basement. The musclemen would beat the trader everyday but he would not tell them where his treasure is hidden. To make sure that the trader does not die before disclosing the location of his treasure, the Lord's servants would give adequate food to the trader and apply medicine on the wounds inflicted by his musclemen on him.

Finally one day the trader gave up and surrendered all his treasure to the feudal lord. He was then released from the prison and sent home alive.

The ballad singers of the feudal lord immediately went around the village singing praises for the Lord, telling the people how kind the Lord is as he would give adequate food and medicine even to the rebels and prisoners.

The ballads mentioning that Central Asian and European Invaders built India, created infrastructure like Rail, Roads and Schools etc. sounds eerily similar to this story. This all roads and Railway looks like food and medicine given to the imprisoned trader - a big farce.

Recently, a narrative has been started to rewrite the history books to present the Indian viewpoint of the events of past 1200years.

I believe that we need to look into our history from the viewpoint of "invader and invadee" rather than through the prism of religion or race, and put things in right perspective.

We must tell our generations about our glorious past; but with the objective of motivating them to recreate that wealth and status. The objective must not be to make them hate some religion or race while continuing to suffer from a sense of servitude for the invaders; carry a deep inferiority complex and refusing to stand up to the tyrants.

Our Children must be given strong reasons to believe that if central Asian and European invaders did not plundered us, we could have created much better roads, railways, ports, monuments and social infrastructure what they created to further their objectives of plunder, oppression and exploitations.

Wednesday, January 29, 2020

Indian railways on the slippery tracks

Earlier this month, the National Institution for Transforming India (NITI Aayog) issued a discussion paper on Private Participation in Passenger Trains (see here). The discussion paper proposes engagement of private players for running passenger trains on 100 train routes. The routes proposed include some of the most popular routes from Delhi, Mumbai, Patna, Chennai, Hyderabad and Kolkata.

The objectives of the proposal to engage private operators for running passenger train are stated as follows:

Introduction of modern technology rolling stock with reduced maintenance
Significantly Reduce Transit Time
World Class Service – Improved User Experience
Capacity Augmentation
Reduce Supply Demand Deficit

I would not like to delve into the mundane issue of whether this proposal is a tacit admission by the Indian Railway that it is not possible for it to provide global standard services in the present format.

I want to raise a rather meaningful and certainly relevant issue.

With over 1.3million employees, Indian Railways is one of the largest civilian employers in the world. With an annual budget of over Rs2trn, it plays a significant role in the Indian economy.

As per the latest data released by the CAG, Indian Railways could be one of the most inefficient rail operators in the world with an operating ratio of 98.44% in FY18. This implies that Indian Railways spends Rs98.44 for every Rs100 of revenue it earns. Excluding the advances received from NTPC and IRCON, the operating ratio for FY18 would be 102.66%, implying operating loss in operations of Indian Railways.

The primary argument behind the privatization of passenger services in my view may be to relieve the Railways from the burden of huge subsidy it provides for carrying appx 8.5bn passengers every year. As per the CAG report, almost 95% of the profits from freight haulage services was utilized towards the loss on operation of passenger and other coaching services.

Besides, the share of internal resources in total capital expenditure also fell to 3.01% in FY18, resulting in higher dependence on the gross budgetary support and extra budgetary resources for capital expenditure. The growth and modernization plans of Railways is obviously suffering.

Keeping the current conditions of the Railways in mind, the points to ponder are as follows:

(a) Once the dedicated rail freight corridors and Sagarmala (sea route for non export cargo movement) projects are completed the share of Indian Railways in freight movement may come down.

(b) Development of highways shall continue to challenge the Railways dominance in the freight movement business.

(c) GST has changed the trade paradigm in the country. There are high chances that henceforth most large projects will be set up close to raw material sources minimizing the movement of bulk materials like coal, iron ore etc.

(d) Engagement of private operators in the passenger freight business may not result in any meaningful reduction in fixed off track (administrative) costs of Indian Railways.

This would essentially mean that the Indian Railways shall be treading on the same path as the public telecom operators (MTNL & BSNL), public air carrier (Air India), Public Power Equipment Manufacturer (BHEL), and Public Coal Producer (Coal India) have treaded in past 2 decades.

With the inbuilt operating inefficiencies and largely inflexible cost structure, running the Indian Railways as a business venture may no longer be viable.