Regulator can eliminate expensive populism
The Union Government's nod to set up the Rail Development Authority of India (RDA) as an independent authority to look after the affairs of the national carrier is not just a major step in the direction of railway reform but the single most important one in many years. For far too long, Indian Railways has been in a critical condition due to issues like unrealistically low rail tariff, faulty execution of policies, poor funding and services — all of which originated from petty politics. With a regulatory mechanism in place, the roles of both the RDA and the railways will be defined. This will ensure that both can perform their roles in a more focussed, efficient and transparent manner. The role of the Railway Ministry will be fixed towards policymaking, parliamentary accountability and autonomy to Indian Railways. The RDA, on the other hand, will perform the role of undertaking the crucial responsibility of deciding freight charges, attracting investments and also giving a plethora of suggestions with regards to setting benchmarks for various services. Market considerations and profitability of Indian Railways were hardly on the priority list of our policymakers. And this is the relevant area where the rail authority is expected to reign in. For example, the politics of populism, with regards to the issue of rail fares, which can be traced back to successive Governments, has wrecked the railways' finances. Whenever there is a rail fare hike, political parties in the Opposition make a hue and cry on the issue despite the fact that they had themselves done the same at some point of time when they were in power.
This is the pathetic condition, and it's not just the economic aspect but also safety and amenities that have been questioned time and again. But all this gets linked to the availability of capital. Much of the deteriorating prospects of the railways have to do with the poor operating ratio under which our railways performs. Operation costs have seen a downfall in recent years to the extent that, the situation as it exists today is that the railways has stopped earning a single penny. Its operational ratio has crossed the 100 mark. Though the Government has set an ambitious target of lowering the operation ratio to 92, it is unlikely to wipe off the past. However, to blame only operational costs for the deteriorating finances of the railways, will be misplaced. To top it all, is the problem of delays that happen when more trains are announced but tracks have not been expanded. This leads to clogging and hence the delays. Overall, Indian Railways has done little to increase productivity or cut down on costs. Money too is a problem. While larger allocation on the part of the Government is necessary, but given that the constraint that the Finance Ministry faces, with demands from various other sectors, Indian Railways must find better ways for income generation. larger participation on the part of the private sector, cutting on costs like fuel and electricity bills, streamlining the functioning of railways, reasonable hikes in tariff and use of real estate railways owns, are some measures that can help save money. While the proposed regulatory body is one of its kind, a lot will depend on the selection of the representatives. Hopefully, the members in the authority will be people of stature and expertise.