1st
C.T. Venugopal Memorial Lecture
Shri
S.K. Mitra, former Financial Commissioner/Railways.
'
I
am grateful to the organizers of this meeting for giving me an opportunity to
address this gathering on a subject, which has been very dear to the hearts of
many IRAS officers. This also gives me an opportunity
to pay tribute to a man who did so much for the service and its officers and a
professional giant who went unsung and unrewarded and denied of the opportunity to hold the top most
position in the railway finance department. Mr. Venugopal has
been a legend. He joined
IRAS in 1930, first officer of the cadre, after formation of Indian Railway Accounts Service
and had worked in various Railways with distinction. He was known for his
professional excellence and remarkable memory. He retired as Additional Member/Finance in
November, 1964. I had the privilege to come in close contact with him. I joined as a
probationer in 1955 and met him for the first time at
He
was a bachelor and his resources as I came to know were spent on helping people with
the result that after his retirement he had to lead a very frugal and austere existence normally not expected from a man
retiring from a high position in civil service. He retained his interest in
service even after his retirement, advising officers about professional
matters, their welfare etc. I have dealt very briefly with one side of his
character that is humanism and love for people. There is another side of his, from
which the
officers of Indian Railways Accounts Service have immensely benefited, his love
for IRAS, which he wanted to be developed as of the best among civil
services. He believed
in performance excellence. He was constantly emphasizing on good
training programme and spent a lot of time to improve the curriculum and texts
of the training, He used to call the
probationers and other working officers for discussion to find out how they are
doing in their training/jobs and what improvement could be brought about to
further streamline the system of working,
development of good culture and environment so that IRAS officers could develop themselves into good
professionals whose services would be sought after by various Ministries/Departments
of the Govt. of India. He had wide
contacts and even as a Director, Finance and later as an Addl. Member, Finance he used I to approach heads of
different Ministries/Public Sectors, sponsoring officers from the service for
improving their career prospect and to give them the opportunity of acquiring experience
in different areas of accounting, audit and finance. IRAS, which was
comparatively new as compared to Indian Audit Accounts and Defence Accounts,
came to be respected because of the good name that IRAS
officers were able to achieve during such deputations. His constant effort was to see that the IRAS officers occupy the highest
post in the department that is Financial Commissioner, Railways, a position
denied to him in spite of his significant contribution to development of
Railway Finance. His dream was however fulfilled much later.
Mr. Venugopal
used to give constant importance for developing professional excellence of individua, officers so that Indian Railways is benefited
from their their contribution. Those who have joined
later after retirement of Mr. Venugopal must have
heard about him but perhaps are not aware about his untiring effort, towards
making IRAS a service of eminence. A number of IRAS
officers continue to occupy top positions in Government and in Public Sector as
a result of this. If we have to honour the legacy left by Shri
Venugopal it will be only be fit to repay the
debt by giving our best in the areas where we serve.
Knowing the man as I saw him in his
work, it would be pertinent to outline about the direction he would have liked
to give to IRAS officers, in the context of vast
changes that have occurred in socio-economic condition of the country. Railways
are passing through difficult times. The growth of Indian Railways has become
unprecedented. It carried 1.2 billion passengers in 1950-51, which at the end
of March 2002 was 4.8
billion. Revenue earning freight traffic, which was 73.2 million
tonnes in 1951, was
about 492 million tonne at the end of March 2002.
The Indian Railways, in its long and
eventful journey, has seen several phases of development. Immediately after
independence, during the decade of the fifties, the Indian Railways undertook
the task of rehabilitation of assets and provision of adequate equipment. This
was required in order to address the problems created by the neglect of the system in the
World War years and accentuated by the special features of the partition. This was also a period of intense industrial
development, which naturally
resulted in sizeable increase in traffic. The Railways, therefore,
had to work to ensure that they could carry the additional traffic expected to
be generated by heavy industries, including coal, steel and cement. To
do so, they had to continue the rehabilitation of tracks, bridges and rolling
stock and generally step up the pace of self-sufficiency.
The decade of the sixties heralded the
era of computerization. The Indian Railways were one of the pioneers in the
computerization of their accounting and statistical data. This was possible
due to a couple visionary officers of Indian Railway Accounts Service.
The seventies witnessed a period of
considerable growth. The emphasis of the Railways was to provide fully for
freight and coaching traffic anticipated during this period and to modernize the system in
respect of its equipment and practices. The Metropolitan Transport Project,
The nineteen-eighties brought about a
paradigm shift in the working of the Indian Railways. A conscious decision was
taken to concentrate on long haul traffic i.e. block-rakes running end to end,
resulting in greater utilization of capacity. To this end a more modern wagon
fleet was segregated from older conventional wagons and operated as 'Express' streams
of freight traffic. There was increased use of close circuit movement
for several major commodities,
adding greatly to the efficiency.
One of the thrust areas of this decade
was the building of sound systems of management information using computers
in areas relating to freight and passenger traffic operations. The computerized freight
operation system was embarked upon in 1987. But it was the computerized
Passenger Reservation System, first made available in 1987, which by far was
the most important facility offered to the travelling public. Today this has expanded to a much larger network
covering more than 750 locations, with the added facility of being able to book
a ticket from any station to any station at a third location. The facility of
booking through Internet has also become available in the current year. With
the heavy increase in the volume of passenger traffic witnessed over the years - Railways
presently carry nearly 13 million passenger per day and over 90% of the reservation accounting for nearly 34% of the
passenger earnings is now done through computers - reservation by manual
process as in earlier days would have led to chaos with attendant malpractice
for which travelling public would have had to suffer.
Around the mid-eighties, it was
realized by the Government that because of the constraint of resources it would not be
possible to fund the entire approved plan of the Railways through the normal
channel of budgetary support extended by the general finance. Therefore, it was
decided by the Government that a part of the requirement of additional assets
should be met through market borrowings. The arrangement considered most
suitable for this purpose was the creation of an independent entity, separate
from the Ministry of Railways. Accordingly, the Indian Railway Finance Corporation
came into existence in December 1986. This was a forerunner of a mode, which
later on came to be utilized in a very big way for financing Central Government
and particularly Public Sector projects. The main objective of IRFC is to
borrow funds from the market. The moneys so raised are used for
acquisition of assets, which are leased by IRFC to the Ministry of Railways. IRFC could save the
Railways from a critical resource crunch as
budgetary support which was 58% in VI Plan, 42% in VII Plan came down to
only 23% in VIII Plan period. From a sum of Rs.2520 cr
accounting for 15% of Railways plan during Seventh Plan period, IRFC has
borrowed about Rs. 13000 crore,
accounting for almost
30% during the Ninth Plan period.
The
Indian Railways also decided to accelerate the pace of the uni-gauge
project.
Another notable development was the setting up of the Container
Corporation of India Ltd. CONCOR was set up with a prime objective of
developing multi-model transport logistics infrastructure to support the
country's international as well as domestic traffic. In the one dozen years of its existence
its throughput has grown several fold.
The nineties may well be termed the
'Era of the Passenger'. This is the time when there has been an enormous increase in
the expectations and aspirations of the general
public. Several developments, such as the progress made by the uni-gauge project, the successful completion of the Konkan Railway line, the introduction of several high speed
inter-city trains and the phenomenal
expansion of the passenger reservation services have helped in offering more and better services to
the travelling public. The recommendations of the Fifth Central Pay Commission were
also implemented, resulting in enormous financial strain. This, coupled with
the inherent constraints in increases in passenger fares, has resulted in a
considerable increase in freight rates, leading to loss of market share.
There has, of course, been
considerable growth in the utilization of information technology in the Railways by way of implementation
of financial and personal information systems. I understand a comprehensive
Management Information System is also being developed, and certain pilot
projects are on, The new Freight Operations
Information System has been developed and is under implementation,
Along with the evolution of the
Railways as I have outlined, the financing of the Railways has also undergone
several changes. In the earliest phase, the construction of major routes was
undertaken on a government guarantee scheme -in that the investors
were assured of a secured return.
Subsequently the government assumed control over the companies, but private
companies continued to manage and operate a large part of the system. Ultimately
the entire rail system, i.e., financing, construction and operation came under the
(British) Indian government. From then on till fairly recently i.e., the mid-eighties,
capital expansion of the railway network has been funded through General
Exchequer and, to some extent, through internally generated resources. As I
have mentioned earlier, it is only in the last fifteen years or so that the
Government looked towards market borrowings (and leased assets) as an
additional source of funding. Presently,
other possibilities, such as Build-Operate-Lease schemes, setting up of Special
Purpose Vehicles for specific projects, joint ventures and funding by States
Governments are being explored. These constitute Public-private as well as
Public-public partnerships. The deliberations in the current seminar go to show
that the available models are several.
In the coming years the Indian Railways, particularly its finance
officers, will have to develop the business acumen and technical expertise to
steer the organization towards the right choices.
The
environment that we work in has also become fiercely competitive. Already, with
successive freight increases, railways are over-priced, leading to considerable
loss of market
share. With the phenomenal development of roads, with pipelines emerging as a
more cost effective option for petroleum products, with coastal shipping and inland waterways, the
mere fact of being energy efficient mode of transport would not suffice for the railways. This is compounded by the
fact that the needs of the freight customer have evolved to an extent the railways
are finding very difficult to satisfy. The requirement is not just of long
distance haulage of bulk goods, but that of complete logistics support. Considerable value
addition, by way of providing composite inter-modal transport packages and
warehousing facilities, needs to be done, Meeting this demand calls for the
development of up to date business practices and of sophisticated costing and
pricing techniques.
In this changing scenario, not only
will the organization have to metamorphose, the role of finance will also need
to undergo considerable change. The general response is that we need to have
"professionalism". But I for one do not hold with that because this
implies that hitherto there has been a lack of "professionalism",
which is not really the case. But I do feel that there is a need for acquiring
a greater degree of technical skill. This would come about in part through
making it mandatory to acquire a qualification in finance. Steps in this
direction have been taken with the setting up of the National Institute of
Financial Management at Faridabad, which now runs
specially designed courses for probationers of all Finance and Accounts Services.
This Institute also runs a course leading up to the MBA degree, which offices
are encouraged to undertake.
Of late there have been suggestions
that the presentation of IR' s accounts needs to undergo a change. With a more commercial
orientation to the organization, the suggestion is that IR's
accounts should also be recast in accordance with the provisions of the
Indian GAAP.
I do not agree that the accounts as
presently maintained present a picture that is not true and fair-
after all we are following rigidly laid down procedures and codes -and are
subject to a rigorous audit by a Constitutionally appointed body. But whether
we need to modify our presentation in future years to make it more intelligible
to the commercial world is an area for thought.
Apart from this, within our
organization, we need to re-examine every aspect of our working, to introspect afresh on
the tasks being performed, the efficacy of the methods being employed and the relevance of
the manuals being followed.
I understand recently Railways Accounts
Officers from all zones representing all levels recently gathered to introspect
and discuss the various issues facing the service. It would appear that a
general consensus was reached on some of the most crucial issues. The perception
across the board is that while the external environment has changed, the
railways, by virtue of their insularity, have remained in a time warp. There is
a need for change so as to remain aligned with the outside environment. It is
also imperative that our processes, which have also remained unchanged over
decades, undergo a paradigm change. Within the railways we have prided
ourselves on the "independence" of the finance function. But this has
also had the effect of our being viewed as an entity different from the rest of
the organization. The time has come to ensure that the goals set for the
finance department are totally aligned with the organizational goals. Finance
and accounts officers should at all levels, acquire professional and technical
competence, so that far from being feared, as they are often, they are valued
for their competence. To this end training becomes a key area. It is critical
that training facilities be set up so that Staff officers, of the finance and
accounts department can be inculcated with the right skills.
There is, thus, a need for an open
mind for exploring possibilities for opening up new areas for improving the
health of the system, efficient working-capital management, improvement in
procedure for asset utl1lzatlon and better and progressive usage of information technology for increasing
mobility of wagons, optimization of rolling stock and computerized MIS. These would help to improve
the financial viability of the system. Compilation of Railway Accounts
in their present format also requires to be reviewed to bring them at par with
the provisions of Companies Act to obtain transparency and better bookkeeping.
Development of a scientific and rational procedure for costing of services
keeping in view changes in traffic operation and business environment would help the Railways
immensely -a task, which I am sure IRAS Officers would accept given their proud record of
expertise and commitment. Developing
professional excellence, to go beyond normal and conventional thinking,
to explore new I sources/untapped sources of earning, better information system
to tap earnings from ticket less travelling,
improving productivity skill of manpower, would help the Indian Railways to emerge as an efficient and viable
organization, occupying a pride of place in
Indian Commercial world. This in my view would be the best way to pay
homage to late Shri Venugopal
who gave so much to make IRAS to be the best among civil services.