I may sound cynical, but in fact I am not. I strongly believe that the time is ripe for civil society to push for reform because outdated IR institutional structure is holding back economic growth. Let us look at how things stand today. The white paper clearly highlights the reasons why IR has been consistently losing market share over the years. Primarily it has been due to below-par growth: for each percentage point the economy grew, IR should have grown by at least 1.25 per cent — but it actually grew by 0.79 per cent. This has brought down the freight traffic market share from 88 per cent in 1950-51 to less than 35 per cent today. IR only contributes 1.18 per cent to GDP when it should be at least 2 per cent. The vision document aims for 3 per cent over the coming decade. If IR is to contribute 3 per cent to GDP, its existing structure has to be radically transformed. Unfortunately the vision document, while recognising the need for change, skims over the details.
Why do I say that a new structure is necessary?
Simply because any change in other infrastructure sectors has come about only after new arrangements have been put in place. The telecom sector changed only when the old arrangements gave way to the new. Modernisation of airports began only after privatisation. The politically-sensitive electricity sector is putting in place, with great reluctance, new institutional arrangements — and improvements can be seen. It is the railways that have shown little inclination to distance the role of government from that of train operator, replace the archaic fare structure, and establish a rates regulatory authority. Creating a globalised rolling stock industry is another area requiring new arrangements, in combination with private industry.
A larger question is network expansion. The document talks 25,000 additional kilometres in 10 years with at least 10,000 km of “socially desirable” lines, regardless of their economic viability in the short run. This is a tall order, when all that IR could achieve in the last 62 years was 10,000 km of new lines. The white paper laments that there is a large shelf of sanctioned projects which languish for want of funds — particularly some that are such, unviable but socially desirable. There is nothing wrong with socially desirable lines per se: globally, investments in railway lines have never been free from an element of equity. It is for these reasons that railway investments are subject of democratic debate. The Jammu-Srinagar and
Agartala-Silchar lines are good examples of projects approved on grounds of equity. However, this cannot be said of a very large number of projects accepted by Parliament.
Recently a new trend has started where projects are announced that have no reason to be built. A few examples to illustrate the point are the construction of a passenger coach factory in Singur in West Bengal and three plants in Bihar: a wheel manufacturing unit at Chapra, a diesel locomotive manufacturing plant at Marhaura and an electric locomotive unit at Madhepura. IR already has two large coach-manufacturing plants, one in Chennai and the other in Kapurthala, and a third one under construction at Rae Bareilly, hence the justification for the Singur plant — augmenting production capacity — is unconvincing. Similarly, the existing wheel and axle plant at Bangalore, locomotive manufacturing units at Varanasi and Chittaranjan are all capable of increasing production; so the units being built in Bihar are unnecessary.
Clearly the democratic debate that selects railway projects needs to be strengthened. The existing system of examining railway performance and plans during the railway budget has failed to provide leadership in halting, let alone reversing, the fall in market share or on investment decision-making. The solution lies in expanding the debate into the public domain.
The debate must compel the political executive to put in place new institutional arrangements so that the private sector can invest and multilateral organisations can lend the sums needed for transforming IR into a modern and dynamic organisation wished-for in the Vision-2020 document. A good place to start would be to take a look at the large shelf of projects suffering for want of funds and those which seem unnecessary.
The author is a former general manager of Indian Railways and former member of the Central Administrative Tribunal