The DK Mittal report has a number of long-term and short-term measures to re-invigorate the railways. As the Minister prepares his first Rail Budget, he should consider those recommendations, writes RC ACHARYA
A Pepsi Rajdhani, Coca Cola Shatabdi, lifebuoy Garib Rath or a Samsung Superfast ExpressIJ The iconic lucknow Charbagh railway station re-named Chyawanprash or the Anand railway station in Gujarat re-named Amul may soon be a reality that will bring much-needed corporate advertising for the cash-strapped Indian Railways. This is one of the many suggestions put forth in the 76-page report by Mr DK Mittal, who was recently super-annuated as Revenue Secretary and asked to head a high-level committee on improving the financial health of Indian Railways.
The committee submitted its report in a record time of 23 days. It consisted of representatives from a few highly successful railway public sector undertakings viz, Ircon, Rites and Concor. It was aided by representatives of some of the top management entities viz, Boston Consulting Group India ltd, McKinsey & Company, Ernst & Young and KPMG.
With a hectic agenda on cards, the committee interacted with dozens of stake-holders including the Ministry of Commerce, Coal India, Steel Authority of India, National Thermal Power Corporation limited, Federation of Indian Chambers of Commerce and Industry, Associated Chambers of Commerce and Industry of India and Confederation of Indian Industry.
It also interacted with the Center for Railway Information Services, Indian Railway Catering and Tourism Corporation, Rail Vikas Nigam limited, RailTel, and some of the Zonal General and Divisional Railway Managers for critical inputs. The four working groups made scores of long and short-term recommendations on passenger and traffic services, freight traffic services, monetisation and additional resource mobilisation, long-term finance, productivity and efficiency, a wide ranfe of subjects indeed.
With a short timeframe at its disposal and an extensive canvas to be covered, the groups ended up with wishlists of the stake-holders, without much analysis on what will provide the biggest bang for the bucks, and where the big bucks will come from. In fact, quite a few recommendations were a repeat of suggestions made a couple of years ago by earlier committees including the ones headed by Mr Anil Kakodkar on rail safety and Mr Sam Pitroda on rail modernisation. The former came with a price tag of Rs50,000 crore and the latter one lakh crore rupees.
On top of Mr Mittal’s committee’s list is the urgent need for the completion of 24 corridors and seven feeder routes for which Rs95,000 crore (excluding electrical and signalling and telecom works) will be required. Another Rs65,000 crore will be needed to optimise the output of these corridors — by doubling gauge conversion, adding new lines, improving electrification and signalling etc — thereby, bringing the grand total to a whopping Rs1,65,000 crore. This is vital for carrying increased amounts of freight, which is the bread-winning business for any rail transport system.
The report also points out that the present level of funding is just Rs30,000 crore and an additional amount of Rs1,50,000 crore will be needed for the next three years — a tall order indeed. Realising that the loss-making passenger services are bleeding Indian Railways, the report suggests the creation of an empowered committee for a regular review of tariff and to achieve recovery of the cost of operations.
It also suggests a policy framework where fares can be increased at 25 per cent of the consumer price index, announced by the Reserve Bank of India on a quarterly basis. In addition, a two paise per km hike for second-class fares, including suburban and inter-city trains, till break-even point is reached, has been suggested.
Hopefully, Railways Minister Suresh Prabhu will make the most of these recommendation to order a gradual hike in passenger tariff, somewhat on the lines of the petroleum products, which saw an increase in petrol and diesel prices by almost 40 per cent over the last three years. This reduced the losses suffered by petroleum companies, which needed regular dole-outs, in the form of subsidies, from the Union Government.
Mr Prabhu has to make up for the time lost over the last two decades. Undoubtedly, these recommendations will come in handy, if he has to take some tough decisions, when he presents his maiden Budget at the end of this month. Sadly, even though Mr Prabhu is aware that passenger business is a losing proposition, he has inaugurated no less than 14 new trains in the last one month, perhaps out of compulsion, since most of them had been announced during the last year’s Budget.
A new format of dynamic pricing, on the lines of air tickets, for some of the trains designated as ‘premium’ could boost earnings, while online ticketing through the IRCTC website should help eliminate touts and fictitious bookings.
(The writer is a former Member, Railway Board)