Transmogrifying a behemoth — the Railways Premium

There is a paradox in the current feel-good image makeover — a deafening silence on crucial policy issues

A speed trial run between Thoothukudi Milavittan station and Melamarudur, in Tamil Nadu | Photo Credit: RAJESH N.

The Indian Railways has never had it so good. So it would seem going by the images of sleek bullet trains, ‘Vande Bharat’ express trains, Vistadome coaches and ‘airport standard’ remodelled stations that usually accompany railway-related news these days, the periodic reports about record-breaking capital investments, historically high originating freight loading, and, thankfully, the historically lower number of accidents. Paradoxically, this feel-good image makeover is also accompanied by a deafening silence on crucial policy issues, especially those that concern the financial health and the future management architecture of the Indian Railways.

Precarious financial health

Despite the recent strictures passed by the Comptroller and Auditor General of India (C&AG) for attempting to airbrush the financial statistics of 2019-20 and 2020-21, in order to project that the Indian Railways is in the black, attempts continue to window dress the financial statistics. Thus, in the revised estimates for 2021-22, against a pension outgo of ₹52,500 crore, the appropriation to the pension fund is restricted to ₹49,000 crore. If the full outgo was reflected in the appropriation to the pension fund, the nominal ‘surplus’ of ₹875 crore would turn into a deficit of ₹2,375 crore, in turn landing the Indian Railways in the red.

Again, in the Budget estimates for 2022-23, under ‘freight earnings’, an incremental loading of 75 million tonnes is shown to generate an additional revenue of ₹20,000 crore; whereas during the 2021-22 (revised estimates), an incremental loading of 169.06 million tonnes generated ₹28,044 crore. The disproportionate increase in earnings vis-à-vis physical loading during 2022-23 (Budget estimates) is not supported by commodity-wise loading figures except for an amount of ₹10,000 crore under ‘Miscellaneous Goods Earnings’, details of which are not available. This fixation to project the organisation as being financially viable has a background.

A dilemma of identity

The Indian Railways suffers from a dilemma of identity: is it a commercial entity or a government department trying to work on commercial principles? As the only “earning” department/Ministry of the Government of India that fully meets the salary, and (till recently) the pension obligations, of its serving and retired employees out of its own earnings, it has always been an outlier. The pressure to project an image of a public undertaking that is financially viable is, therefore, immense. This explains the tendency to fiddle with financial statistics.

On the other hand, there is the recent trend that the Government is pursuing to invest heavily in projects with long gestation periods — examples are line doubling and new lines and 100% electrification (not all of which are viable) — financed by heavy institutional/market borrowings, This sends a signal that the organisation has switched to a policy of heavy investments toward capacity expansion to be in a ready state to meet future traffic needs. Revenue generation, at least in the short term, will, therefore, lag the working expenses which include repayment of loans/lease charges, that are skyrocketing, with a drastic reduction in internal resource generation.

The Eighth Pay Commission, normally due by around 2025-26, is bound to strain finances further. The Government needs to acknowledge that in the short term, the Indian Railways will have to function as a “spending department”. A realistic projection of the financial position will spur concerted action to reverse the trend within a short time frame. Band-aid measures such as tinkering with the financial statistics could result in transforming the Indian Railways into another basket case like the former government-owned airline, Air India. Therefore, the investment policy needs to be spelt out clearly.

‘Silo-less’ utopia

The absence of a clear policy is evident in another crucial area: changing the management architecture of the Indian Railways. A momentous decision was made by the Union Cabinet in December 2019 to do away with the decades old system of recruiting officers to the eight organised ‘Group A’ services in the Railways (five technical and three non-technical) through the Combined Engineering Services Examination (CES) and the Civil Services Examination (CSE), respectively, and instead have recruitments to a single service called the Indian Railways Management Service (IRMS). The ostensible reason for this tectonic shift was to curb the scourge of “departmentalism” that was seen to hamper optimum decision making and the smooth working of the Railways.

After a delay of more than two years, the formation of IRMS was officially notified on February 9, 2022, followed by the announcement of a nearly 40% reduction in the ‘Group A’ cadre strength under the IRMS. More significantly, it was also notified that recruitment would be through the CSE. The purported argument advanced for this astonishing decision is that, even now, about 70% of the candidates who qualify in the CSE are engineers and, therefore, there is no need to hold a separate examination for the IRMS!

Certain conclusions/consequences follow from these decisions. First, the Indian Railways is content to recruit its managers (remember, not engineers) to manage technical functions from a cohort of engineers who have already decided to pursue a career outside engineering. Second, it is most likely that the recruits will not be among the top rankers in CSE. Third, these “reluctant engineers” may not become available in sufficient numbers, assuming that the Government still considers that candidates with an engineering background are required to manage technical functions within the Indian Railways. Finally, with no ‘departmental silos’ and a common seniority, it is possible to visualise a situation where a recruit starts his career managing locomotives and rolling stock, then advances through middle management levels managing track, signals and communications, and then at senior management levels, works as financial adviser and human resources manager, ending his illustrious career at the apex level handling policy matters on operations and business development. A truly rolling stone gathering no “departmental moss”!

Privatisation moves

This may appear to be almost bizarre. Yet, there could be a method in this apparent madness. The Indian Railways is poised to migrate to the Public Private Partnership (PPP)/Joint Venture (JV) mode or outright privatisation in its major activities such as train running, asset maintenance, station management, project management and execution, production units and medical services. All relevant domain expertise will reside in the private sector, supported at the lower levels by promotee managers and supervisory technical cadres. The research and technical training establishments could be spun off as autonomous institutions. The residual Indian Railways will be “managed” at the middle and higher levels by a cadre of free-wheeling managers, essentially functioning as contract administrators.

This perhaps explains the unprecedented reduction in the cadre strength of the IRMS by almost 40% when compared to the cadre strength of the present Group A cadre, i.e., from over 8,000 to about 5,000. In effect, this is the beginning of the end of the Indian Railways as we know it today.

It is tragi-comic that a matter that is of seminal importance — a veritable transmogrification of the Railways — should be the subject of second guessing, conjecture and speculation, in the absence of clearly enunciated policy. The situation was succinctly summed up by a young railway engineering aspirant thus: “It appears that Indian Railways do not require engineers.”

About a year ago, it was none other than the Prime Minister who vented his frustration on the floor of Parliament over the ubiquitous grip of the generalist in all areas of the public sector, His statement in Hindi was: “Sab kuchh babu hi karengey? IAS ban gaye matlab woh fertilizer ka karkhana bhi chalayega, chemical ka karkhana bhi chalayega, IAS ho gaya toh woh hawai jahaz bhi chalayega? Yeh kaun si badi takat bana kay rakh di hai humnay?” It can be translated as: ‘Will bureaucrats do everything? Just because they’ve become IAS, does it mean they will run fertilizer factories, chemical industries,... if one becomes IAS will he even fly aircraft? What is this humongous force that we’ve created?’

Which raises the question: what does the Government really want?

K. Balakesari, belonging to the Indian Railway Service of Mechanical Engineers, was Member Staff, Railway Board. E-mail: balakesari_k@hotmail.com