PRIORITY AREAS FOR EXPENDITURE REDUCTION

 

 

INTRODUCTION

 

 

Indian Railways are passing through a very hard time. To deny this would be akin to hiding ones face in the ground like the ostrich which at the sign of an approaching enemy buries its neck in the ground, confident in its thought that since it cannot it see the enemy, it can also not be seen by the enemy. It is true that the 5th Pay Commission has placed an enormous burden on our resources. Reduction in the sanctioned manpower strength will remain a priority area if we want to be improve our financial health and it is heartening to know that there is lot of stress on manpower planning. It is hoped that in near future, some reduction in manpower will be possible. However, there are some other areas, which do not get the attention they deserve. If focus is brought on these areas, the reduction in expenditure may be quite substantial.

 

            Some of the areas, which deserve more attention, are given below. An attempt has also been made to analyse the various factors leading to such expenditure and possible remedial measures for avoiding expenditure in these areas. 

 

A)               Huge Payment to State Electricity Boards

B)               Payment of OT

The above two aspects are discussed in detail below: -

A)        Huge payment to State Electricity Boards:

          It is an open secret that the State Electricity Boards (SEBs) suffer from inefficiency, power loss due to theft & rampant corruption. These factors have pushed almost all the SEBs into deep red. However the SEBs treat the Railways like a milch cow and extract exorbitant tariff from Railways. An analysis of MPEB had shown that while they procure power at the rate of around Rs. 1 per unit from NTPC, the same is sold to Railways at around Rs.5 per unit. This when the Railways has its own arrangement for distributing power. The tariff structure is also extremely punitive in nature, and even an excess demand for 15 minutes in a month over the Contract Demand, invites penalty for the whole

month. Here it is noted that SEBs must be the only organisation in the world, which penalize a user for excess consumption. The tariff of all other business organisations are structured in such a way that the higher the consumption the lower the charges. Even Railway’s fares are telescopic in nature i.e. the further you travel or carry goods the lesser you pay in terms of per Kilometer fare or freight.

 

 While the tariff per unit varies slightly from SEB to SEB, the penalty clause is almost uniform. The net result of the very high tariff and unreasonable penalty clause is that the Railway ends up paying exorbitant rate. Thus if power, which is procured at Rs.1 per unit, is sold to a Rs.5 per unit without any values addition whatsoever we can safely say we are being short changed by the SEBs.  If the State Electricity Boards procure power at Rs.1 and make adequate provision for transmission loss, thefts, overhead and profit margin, even then the total charge should not exceed Rs.2.50 per unit.  Thus, we can safely say that we are paying 100% more than what can be called the legitimate claim of SEBs. The total payment made by the Railways to the various SEBs during the last 5 year is given below:

 

 

Year

Payment made to SEB (Traction & Non-Traction)

in Crores

 

1998-99 (Actual)

3368

 

1999-2000 (RE)

3633

 

2000-2001(BE)

3997

         

From the above, we can see that at present, we are be paying around Rs. 4000 Crores every year to SEBs and assuming that the tariff is 100% more than the reasonable limit, we can say that we are paying roughly Rs. 2000 Crores extra to all the SEBs. This is an indeed a huge burden on the already over stretched Railway’s Finances.

 

          Here it is also pointed out that all of the SEBs increase their tariff on their own and are not bound by any approval from parliament, which has made many of them to be very unreasonable. The stiff tariff structure and the unreasonable penalty claim is incorporated in all agreement by the SEB, which the Railway has to forcibly sign. At present the Railway is also not authorised to purchase power directly from the producer except in one or two section in the entire country. To say that the dice is loaded unfavourably against the Railways in its dealing with the State Electricity Boards would be to be very mild indeed.

 

In view of what has been discussed above, it will be clear that urgent

action is required to put pressure on the SEBs to make their tariff reasonable and to review the agreements entered into with all State Electricity Board so that the agreements is revised and become more even handed and balanced.    The task will not be easy as all the SEBs will oppose it; however, persistence at the highest level will definitely bear fruits. Some of the area, which should be covered in the agreement, is also suggested below:

 

1.                 The highly unreasonable penalty claim in the agreements has to be diluted if not totally eliminated.

 

2.                 SEBs should offer subsidized tariff to Railways for use between off peaks hours say 22.00 Hrs. to 06.00hrs. Most of the industries remain closed during this period and encouraging user to use power during this period will make the supply of SEBs more uniform.

 

3.                 At present very stiff penalty is imposed if the payment is not made between a target date set by the SEBs. This clause should be diluted or replaced with incentive scheme whereby by the Railway gets a credit for making early payment.

 

4.                 The system of meter reading is also faulty. Many times SEBs official take unilateral meter reading in which the Railway is not involved. Huge penalty bill is then forced on Railway for payment. This occurs more in the month of February, March when financial targets of various units of SEBs have to be met. Needless to say, these surprise checks are only meant to bridge the gap between target and the actual collection of that unit of SEBs and most of the times it has been seen that the readings recorded during such checks are grossly inflated and bear absolutely no relation to the actual consumption. Provision should therefore be made for  joint meter readings only.  

 

5.       Many SEBs require Railways to pay security Deposit. This is very surprising as Railway is a Central Govt. Organisation and performs its duties for & on behalf of the President India. Requirement of SD should therefore be waived wherever they are in vogue.

 

6.                 The SEBs owe the Railways huge amount of money towards outstanding freight. There should be clause in the agreement, which will permit adjustment between Outstanding freight charges and energy bill.

 

7.                 Power user consultative committee should be formed by every SEBs, which should include representative from the industry, MPs, MLAs etc similar to DRUCC, ZRUCC, and NRUCC of Railways. These committees can act as a pressure group on the SEBs to keep them on proper path. Consulting these committees should be made mandatory before any upward revision of tariff.

 

8.                 Suitable amendment can be suggested in the Electricity Act so that power producers can directly sell power to the consumer without the SEBs acting as middleman. This will inject some competition in the system and go a long way in improving the performance the SEBs.

 

B)      Over times allowance

 

The analysis of expenditure on OT indicate that the average OT paid during the last three years for the Railway as a whole is around Rs. 200 Crores per annum.

 

          The above figures reveal something very startling. While it is known that IR suffers from excess of manpower, on the other hand we spend around Rs.200 Crores every year on payment of Overtime to the staff. This paradoxical situation needs some thought. The man reason for generation of OT can be broadly divided in the following categories.

 

1.                 Faulty distribution of staff amongst various activities centers.

2.                 Improper utilisation of Leave Reserve/Rest Giver provision.

3.                 Deliberate booking of OT by a group of staff resorting to relay leave.

4.                 Improper roster given to staff.

5.                 Improper booking of Running Staff.

6.                 Utilisation of Running Staff for non-Running duties.

 

Let us briefly discuss each of these briefly.

 

1.                 Faulty Distribution of staff amongst various activity centers:

 

With the closures of many big Marshalling Yards a number staff of mechanical, Operating, S&T and Engineering department were rendered surplus. On the other hand, these very departments suffer from shortage of manpower at other stations or other work place where OT is paid due to shortage manpower.  Thus, it is important that when an activity ceases to exist, the staff deployed for that activity should be re-deployed to another activity which requires more staff. While in theory this looks simple, in practice this is done only rarely, mainly due to resistance faced from Unions and due to non-seriousness attached to the whole issue.  The Railway Organisation is very dynamic and changes in the activity profile are its permanent feature.  It is therefore felt that due importance should be given to immediate redeployment of staff from activities which have either reduced or ceased to exist to activities which are on the increase or activities which have less than required manpower. Merely identifying surplus staff while we continue to pay OT will be doubly wasteful.

              

2.                 Improper utilisation  of Leave Reserve/Rest Giver:

 

In one Division of S.E.Railway it was seen that the LR/RG meant for one

Stations were improperly utilised at another station even though there was a shortage of staff at the former station and no requirement of staff at the latter station. So even though full quantum of LR/RG was available in the department, OT was generated as the LR/RG meant for a station was irregularly utilised at another station. This practice was rampant throughout the Division and is most probably being followed all over the Railways. This leads to the suspicion that there might be collusion amongst the staff and the supervisor to deliberately generate OT by starving a unit of its LR/RG needs. It was also noticed that not enough attention was being paid at the officer level regarding such utilisation of LR/RG.

 

3.                 Deliberate booking of OT by a group of staff resorting to relay leave.

 

This is an age-old method used by group of staff at a particular station to

Claim OT. Each staff goes on leave as per a pre-decided plan for a fixed number of days. As explained earlier, the staff can be certain that the LR/RG meant for the station will be directed elsewhere. Therefore their colleagues will be asked to work Over-time. Here, the most disturbing aspect is that the leave taken by the staff is many a times not posted in their leave record as the whole process of posting of leave record suffers from serious lacunae. So while the staff enjoys leave without his leave account being debited, his collogue merrily earn OT. The Railway on one hand looses on account of non-debiting of leave records and on the other hand pays OT for staff who deliberately absent themselves.  

 

4)       Improper roster given to staff:

 

          Many a times it is seen that staff, who should be in Essentially Intermittent category, remains in Intensive category or Continuous Category. Gate-man, Vehicle Driver, Weigh Bridge Clerks etc is very good example of this. Gateman of those level crossing which have less traffic are many times put on Intensive or Continuous category. Vehicle drivers and Weigh Bridge clerks normally remain idle throughout the day and are utilised for an only a couple of hours or even less in a day. In many instances, it was seen that the Vehicle driver or Weigh Bridge Clerk was idling for the full day and utilised for a few hours beyond office hours thereby resulting in payment of OT. Similar cases are galore in other categories also. Thus proper review should be conducted to change the category of those staff whose nature of duties are intermittent. In the Railways unfortunately, normally the reverse is true. The category of roster of staff is changed mainly from Essentially Intermittent to Intensive or Continuous if demanded by the Union on the plea of increase in workload. It is felt that the roster of all staff whose duties are of intermittent nature should be made either  Excluded Category or Essentially Intermittent Category. Some categories like Vehicle Driver, Weigh Bridge Clerk, etc. should be put in Excluded Category as their nature of duty is very sporadic.   

 

5)                 Improper booking of Running staff:

 

Inspections carried out at various crew booking points showed that a few staff were repeatedly booked on duty even at the cost of breaching their rest hours, while a few staff were forced to remained idle. So on one hand, the idle staff got full payment including various running allowances, the privileged few who are booked frequently, ended up earning huge amount Over Time/ Breach of Rest Allowances, etc. This practice is rampant at many places.

 

 

6.                 Utilisation of Running staff for non running duties:-

 

It has been noticed that Drivers/Assistant Drivers, Guards, etc. are at

times assigned stationary duties and a group of such staff enjoys the privilege of stationary duty for years together.  They get all the perk of a running staff even while performing stationary duty due to prevalent rules and is also not exposed to the hardship associated with the running duty.  This creates the problem of generating shortfall in the cadre of running staff as the staff actually available for duty gets reduced.  This automatically leads to payment of OT. The above also creates heart burning among running staff who have to perform running duties as they feel that their counterpart who are assigned stationary duty are being favoured.  More startling was the fact that the running staff deputed for non-running duty was detained beyond duty hours and paid OT. Many a times these staff refused to do stationary duty unless they were paid OT. Thus, it is seen that an artificial scarcity is created amongst the running staff by deputing a few of them for non running duties and then OT is paid to all the staff irrespective of the fact whether they are on running duty or are doing stationary duty.

 

While the annual expenditure of Rs. 200 Crores for the entire Indian Railways, may not seen to be substantial, it is stated here that in view of excessive man-power in the Railways, payment of any OT should be viewed with suspicion and steps should be immediately taken to curb minimize or totally eliminate payment of OT.  It is felt that if enough attention is paid in the above areas, sufficient reduction on expenditure on OT can be achieved.       

 

CONCLUSION

 

Thus it is felt that while lot of importance is given by Railway to manpower planning with a aim to reduce wasteful expenditure, the loss of resource on account of unreasonably high payment to SEBs and on account of huge payment of OT normally escapes attention. Focusing attention on these twin problems will save Rs 2500 Crores for the Railways every year without hampering its functioning in any way.  But for this to happen, the tariff structure of the SEBs will have to become more reasonable and payment of OT will have to be almost eliminated by taking firm steps.

                   

While the above steps will not be easy to implement sustained focus on them will definitely bring results and ease lot of burden of the Railways.

 

(Sanjay Kumar)

                                                                                                     Dy.FA&CAO(C)/BSP.