Economic Times, New Delhi, December 6th
2002
The
Tenth Plan period may prove to be the most challenging phase in the history of
Indian Railways. The creaky network
which has seen almost an accident a day between April 1 and November 20 this
year (227 accidents) is desperately in need of upgradation and restructuring.
Also, it needs to shore-up its earnings and cut down on its operational costs,
particularly the cost of its personnel.
The Ninth Plan period saw passenger traffic
growing beyond projections, but the originating freight fell short to the
extent of 36 million tonnes in the terminating year. The major reason for the shortfall in freight traffic is the
marked preference for road transportation, which besides being cheaper, also
offers door-to-door service. At
present, railways carry around 65% of the long distance bulk traffic.
It is feared that more freight traffic
will prefer road transportation if the railways fail to come up with innovative
schemes. Fortunately for the railways, a small beginning this financial year to
rationalise tariffs, and the loading of freight has yielded some positive
results. This initiative can be traced
back to the Rail Budget 2002-03 where the Ministry attempted to rationalise tariffs.
The draft Tenth Plan document
highlights the need for a strategic shift in the objectives of the railways so
as to regain marketshare in transportation.
The thrust of the organisation has to be on modernisation and
technological upgradation of the system, particularly along the golden
quadrangle and its diagonals. The
golden quadrangle and its diagonals account for 25% of the total broad gauge
route kilometres and carries more than 65% of the total freight traffic and 55%
of the total passenger throughput. The
document has laid down an eight-point strategy:
1.
Rebalancing of tariff
to make the railways competitive and market sensitive;
2.
Augmentation of
capacity through technological upgradation and modernisation;
3.
Re-orientation of
investment strategy, focusing on improving capacity in high density corridors;
4.
Spinning off non-core
activities as separate entities;
5.
Constitution of a
Railway Regulatory Authority to depoliticise fixation of rail tariffs and
regulate railway activities;
6.
Identifying the railways’
social and commercial roles;
7.
Altering accounting
practices into company format; and
8.
Restructuring the
core business activities on sound commercial lines.
While
the strategy encapsulates the measures the railways need to take, it is now
well accepted that rationalisation of freight tariff is imperative. The skewed structure became more accentuated
during the Ninth Plan period when freight rates increased 12% in 1997-98, 4% in
1999-2000 and another 5% 2000-01. Passenger fares, in contrast, were hardly
increased. Consequently, the total
subsidy on second class fares and sub-urban passenger fares increased to
Rs.3,800 crore. Along with
rationalisation of tariff, the railways need to increasingly focus on
containerisation and reducing delivery times and introduce faster freight
trains to attract more freight traffic.
Then, there is the need to improve the infrastructure. The
total number of projects on hand on April, 1, ’02 was 286 with an estimated
investment requirement of Rs.37,929 crore.
There is an urgent need to prioritise these projects instead of
spreading resources thin. Reducing staff cost is perhaps the biggest challenge
facing the Railways today. The organisation carries 25% excess manpower and its
ordinary working expenditure increased from Rs.12,000 crore in 1994-95 to
Rs.30,000 crore in 2001-02. During the same period, pension charges grew
3.5-fold and staff wages and salaries went up 2.6-fold. The total expenditure
on pensions, staff salaries and wages constitute about 53% of the total
ordinary working expenses.
----******----