Chart1- illustrate the vastness of Indian Rlys network over 60000 RKMS, over 1 Lac track KMs which is 4th largest in the world. Modernisation of such vast network is Herculean task.
Chart-2 illustrates the additional financial burden tha 7th pay commission will put on railway finances. It is estimated that 68% of revenue generated by IRys will be consumed in payment of salary and pension to employees and ex-employees. Then there are essential expenditures like fuel cost, Maintenance of Rly assets tracks, bridges, stations etc, Administrative expenses, Payment of dividend, Provision for various funds etc. Then where is the amount left to for repayment of the huge loans and the interests.
Chart...
more... 3 shows that the quantum of investment proposed ion IRlys in 5 years is more than GDP of many nations
In a nutshell IRlys is at crossroads. It will either become a world class railway or become a highly loss making bankrupt railway. Every thing depends on the huge investment it is planning to make. If the money is invested in profitable projects/ventures, the revenue generation will grow drastically so that all the past and the recent loans can be repayed. And if invested in projects with low rate of return, bankruptcy is inevitable sooner or later depending on huw much Govt of India can support and for how long.
Some weaknesses-
(A) High employee costs- No organization can survive & thrive if 68% of its revenue go into salary & pension. There is need to introspect and critically analyze the operation by innovatingly simplify the activities and procedures of Railway operation and administration.
(B) Lack of proper analysis and decision making in the major investments like new line, gauge conversions, new trains, new factories etc. Decision making base on gut feeling are likely to go wrong way.
(C) Complex structure and multiple layers of administration. Too many departments which are working more to their own interests resulting in severe inter departmental rivalry. Result is the much of effotrs, energy and resources are wasted due to lack of synergy and IRlys as a whole lose heavily. Rly Board-Zones-Division too many layers of administration and too many number of office establishments drastically increase the operational expenditure. With tremendous developments in communication technology, Computer, IT & IT enabled services, so many layers are not required. With poor means of communication, BSP division was profitably maintained. Now it has been divided into 3 (SBP & R).
(D) Lack of monitoring mechanism & very slow decision making process- A train continues to operate even if it goes with very low (even single digit occupancy) for months and years there by financially bleeding. Even if corrective action is taken to reduce the losses, it take a very long time till significant loss has already been incurred. Every activity need to be monitored continuously with intention of avoiding revenue leakage, improving profits and so on and suitable corrective action then taken. Quicker the decision/ corrective actions lesser the losses more the profits.
Some of the strengths of IRlys are
(a) Energy consumption on rails is only one sixth of the energy consumed by road sector. i.e. Indian railways is inherently more energy efficient.
(b) IRlys can take benefits of economies of scale. Private bus operator has to employ atleast 3-4 running staff ( 2 drivers, helper, cleaner) to carry about 35-40 passengers in a bus where as a 26 coach train can carry 1000-2000 passengers and the number of running staff is extremely less in proportion (driver/ TTE/Guard).
(c) IRlys is safer than Road sector which is pron to accidents as all kinds of traffic move on road. Railways move in one dimension and there is certainity of traffic i.e. train moves only if there is signal which ensure that there is no other train on the same path.
(d) IRlys is much less polluting than road. IRlys must put on efforts to quantify the carbon credits earned and monetize it.
Some steps to improve Rlys could be could be:
(1) To off load the non core activities like cleaning, other non skilled jobs to private sector. Cleaning at stations has drastically improved after involvement of private sector. The cost shall be much less than the salary & perks which would have been given to Rly employees doing this job. Any how a person at lowest cadre of IRly will get a salary decent (or social status high) enough that he/she will not like to do sweeping at rly station infront of public. Similarly other non-technical lower order jobs can be handed over to private sector which can manage such jobs mush better and at much lower costs.
(2) Temporary freezing of all the loss making projects till the financial condition improves. At the same time the profit making projects which are and much needed to expand capacity to provide convenient and cheaper freight solutions must be pursued aggressively. Aim shall be to bring down the logistic cost of freight much to the betterment of Indian Economy and at the same time bringing in cash surpluses to IRly
(3) Rationalization of the plethora of concessions given by Indian railways. Concessions must not be given to upper segments of passengers like AC1,AC2. Concessions should be limited to only a certain slabs say 20% and 40% on the base fare where as some of the concessions are 75% (or higher also?)
(4) Rates per km of difficult stretches can be make higher as has been done in the case of Konkan Railway. If Indian can pay for Konkan travel, they can pay for rest of India travel also. 50 km ordinary bus travel in valley of Kashmir cost much more than the same distance bus travel in plains. Distances for tough ghat sections can be inflated where the cost of construction, energy and maintenance is much higher. This will bring in additional revenue. In line with the fiscal principle, there has to be some linkage between the actual costing and actual fares realization. This policy have capability to mahe many financially bleeding project into the financially rewarding them.
(5) Going for Roll On Roll Off in a big way (esp. for smaller freight) after creation of capacity so that the Railway and roadways help each other rather than compete each other. This way IRlys can profitably regain their traffic lost to roads.
