Open Forum

New Delhi, 7 December 2006

Railway Corporatisation

Private Sector Participation must

By Dhurjati Mukherjee

The modernization of the Railways can only be accomplished through corporatisation and this has been realized to maintain its growth path. Way back in the year 2001, the Rakesh Mohan committee’s recommendations that included decentralization power, encouragement to private participation and eventual corporatisation of the railways and all these are in the process of steady implementation.  

The Rakesh Mohan Committee report was not quite favoured when it was submitted because political and business environment was not conducive for such a reform-oriented measure. However, over the years a lot of development has taken place, necessitating revamp of railways.

The most important challenges before the Railways are: reorganization of the core transportation network into key components – freight, passenger, suburban, fixed and shared infrastructure; track renewal and modernization so as to ensure faster movement of trains; expansion of the railway network; ensuring proper safety standards to reduce accidents; improving flexibility and cost competitiveness; and meeting the challenge from private airlines which have drastically reduced fares (almost like AC-III tier rates).

To cope up with these developments, a lot of expenditure and various other efforts would be imperative for which corporatisation to become necessary. The Rakesh Mohan committee had predicted that the Railways would not be able to generate the kind of resources needed to give a market rate of return on additional debt and fresh preference capital. It had stated that the low-growth business would drive the railways to “a fatal bankruptcy”. In 16 years, the Government will be saddled with “an additional financial liability of more than Rs 61,000 crores”, the report added.

As a first step, the Government has set up an advisory group to chart a roadmap for public-private partnership projects in the 11^th Plan (2007-12). The political will for corporatisation to improve the functioning of railways has become evident as the Railway Minister recently stated the need for close coordination and liaison with the private sector. According to him, private sector participation would be needed in modernization of Railway stations, setting up of agro product outlays at railway stations, construction of sidings and logistic parks, wagon manufacture, port connectivity and setting up of a dedicated freight corridor. The process of private sector participation has already started and experience shows that worldwide it has taken a minimum of 10 years for this to fructify.

It may be mentioned here that Vajpayee had on January 24, 2003 created the Rail Vikas Nigam Limited with the responsibility to mobilize resources and execute projects needed for the Railways to grow. Even as the RVNL set about getting its act together, the mandarins in the Railway Board did not lose any time in handing over 56 projects, involving line capacity, port connectivity and four bridges. The assets after creation were to be transferred to the Railways for operation and maintenance though the RVNL would receive ‘access’ charges, providing it with a steady source of revenue.  

It was also decided that projects not yet taken up by the zonal Railways construction organizations and the Central Organization for Railway Electrification would be taken up by the RVNL. The RVNL’s task was to engage consultants to establish ‘bankability’ of projects, restructure projects and develop new financing models. So far the response to private sector participation has been encouraging. Built-operate-transfer schemes have also generated adequate response from the private sector.   

A viability study for the upgradation of the golden quadrilateral for increasing the speed of freight trains (and also express trains) is under way. In this fiscal year, the RVNL is expected to raise Rs 1000 crores from the market – mainly through the Indian Railway Finance Corporation. The Asian Development Bank (ADB) will also provide Rs 400 crores and the Railways will chip in an equal amount as budgetary support. 

The Railways are thus faced with huge expansion plans, track renewals and meeting safety standards (due to frequent accidents) with very little resources at its command. An investment of over Rs.300,000 crore by the year 2015 are proposed in a host of activities such as gauge conversion, freight corridor along with upgradation of feeder routes, asset renewal and augmentation of high density routes and increasing the manufacture of rolling stock. 

The efficiency of the Railways is regarded as quite low as also the service it provides to the passengers but efforts are being made to improve the functioning. The Railway Safety Review Committee headed by Justice Khanna had observed: “A single flaw in the 62,495 route km. of track that crisscrosses the country, a defect in the 7500 locomotives, 40,000 coaches and 2.5 lakh wagons that haul more than 11 million passengers and over 1.2 million freight every day, an indication on one of the thousands of signals, a mistake or an act of negligence by one of its 600,000 frontline staff directly associated with train running, even a rash act by one of the million road users who daily negotiate about 40.000 odd level crossings spread across the system, an irresponsible act of carrying inflammable goods – any one of these possibilities has the potential to cause a major tragedy”.

Indian Railways are a highly labour-intensive system. It is therefore not surprising that two-thirds of the accidents are on account of human failure. Thus technology upgradation has started in order to reduce dependence on the human element, as is the case in most other countries. This is, however, a costly process. The pace, stage and level of technology depends on extent of investment, size of operations, increasing demand of traffic and assimilation of technology.

A Railway safety fund has already been created to clear the backlog of arrears of track renewal, rehabilitation of distressed bridges and overhead signaling gears, coaches and wagons. This has a corpus of around Rs 20,000 crores out of which the major part (around 70 per cent) is expected to be provided by the Centre and the remaining by the Railways through a safety surcharge which has been in place since October 2001.

There is an imperative need to revamp the whole railway system so that there is improvement in its viability as also in its quality of services. All round safety standards have also to be ensured. Moreover the expansion of the railway system also cannot be ignored. All this is definitely an enormous challenge that, experts feel, can only become realistic through proper planning and phased privatization.  Parochial interests of politicians should not come in the way of implementing a viable action-plan for the coming 10 years of the priorities and challenges before the Railways.

Lalu Prasad Yadav has already declared that his intention was to make Indian Railways one of the best in the world and the private sector was being encouraged to participate in its non-core activities. Thus the government’s is steadily moving towards corporatisation to make the Railways viable and healthy along with keeping its social commitments. With surplus of more than Rs 13,000 crore, the Railways are poised to surge ahead at a fast pace in the coming years.---INFA

 (Copyright, India News and Feature Alliance)

Open Forum

New Delhi, 30 November 2006

Promote Scientific Research

Expenditure Needs to be Geared Up

By Dhurjati Mukherjee

The PM regretted recently that research standards have declined in Indian universities and warned about a “disconnect between research and teaching in the sciences”. Moreover the type of research being conducted was concentrated in specialized institutes and generally did nor have a direct bearing on society. The universities also had difficulty in mobilizing adequate financial and intellectual resources which, in turn, hampered research.

Delving into some bare facts, one finds that R&D expenditure has remained static at 0.8 per cent of the GDP during 1985 to 2005 though China increased it from 0.5 per cent to 1.3 per cent during the same period. Japan and South Korea spend 3 and 2 per cent respectively on R&D. Moreover China increased its number of scientific publications to 104 times during the two decades while India could do it only 2.3 times, according ta a study by R. N. Kostoff of the U.S. Office of Naval Research. 

Eugene Garfield, the American pioneer in mapping scientific information, has corroborated the decline in Indian standards. According to him, in 1973 Indian scientists accounted for about half of the developing world’s quality science papers. In the 70s, his benchmark Science Citation Index places India in the 8th place behind the US, UK, USSR, France, Japan and Canada. By 2000, India had slid to the 15th place.

Though one may argue that citations need not be the only benchmark, India’s agricultural research has also not been very successful to develop ground-breaking techniques for the rain-dependent farmers, as result of which production and productivity is very low in drought prone areas. Regarding defence research, the Defence Research & Development Organization’s (DRDO’s) ambitious plans to achieve 70 per cent weapons indigenisation by 2005 has been abysmal failure and may not be accomplished even by 2010.

According to a 1999 CAG audit, the development of the Pinaka, a multi-barrel rocket launcher, was compromised by non-availability of qualified manpower. The DRDO’s scientists are grossly outnumbered by up to four times the auxiliary staff than found in similar private sector establishments. As regards the Indian Space Research Organization (ISRO) is concerned, India’s success stories are far behind that of global competitors.

For example, China has launched 24 foreign satellites so far, sent two manned missions into space, is believed to be planning a human mission to Mars in 2017 and a satellite navigation system akin to the European Galileo. India has only just begun to consider sending a man into space and would still take another 6-7 years to launch manned space aircraft.  Moreover, the GSLV crash is indeed a big setback to the country’s entry into the $ 2 billion commercial satellite launch market.

In pharmaceuticals though, India is a leader in the Third World, it has done no better when it comes to discovering new molecules to treat diseases. “No new molecules are being discovered”, observed Dr. C. M. Gulati, a drug expert, adding that what is happening is just “peripheral research where the industry is developing new formulations of existing drugs or new routes of drug delivery and getting patents for these”. With this kind of research, experts believe that India cannot capture even 0.5 per cent of the drug R&D market. In fact, the country’s medical research has no productive link with the rising pharma industry.

Apart from these sectoral developments, interest in science education is also on the decline. Students opting for pure science for graduation in India dropped from 32 per cent in 1950 to 15 per cent in 2000. Scientists per million population in the country in a mere 157 compared to 545 in China and 2319 in South Korea. Obviously this is because on R&D expenditure per capita is a mere $ 5.5 compared to $11.7 of China and $ 241 of South Korea. It is true that India produces some finest scientists and has some very good laboratories but they are like proverbial islands of excellence surrounded by a vast ocean of mediocrity.

Although our science and technology policy has advocated pubic-private partnership in research, industry’s contribution remains just about 20 per cent as compared to around 70-80 per cent in advanced countries and 40 per cent in China. It is indeed intriguing why the Indian private sector has been unable to contribute to R&D compared to their counterparts in South Korea and Singapore not to speak of the Western nations. Except for the Tata group and another one or two in the pharmaceutical sector, the contribution of even the market leaders in industry towards research has been quite poor. Even industry-wise, R&D expenditure has not been encouraging except, of course, for the pharma and IT sectors.

Realizing the imperative need to give a boost to science education and attract more students in this field, the Scientific Advisory Council to the Prime Minister decided to set up the National Science & Engineering Foundation and two new institutes of science. The proposals come with some hefty price tags: Rs 500 crores for each of the two institutes and Rs 1000 crores for the Foundation to fund basic research in the universities. The obvious goal is to inject more money into science and create more centres of excellence and basic research.

The Government’s concern at this juncture cannot be doubted and quite justifiably, so as the country aims at achieving international standards and become globally competitive in the coming years. The warning of ‘acting now’ has been rightly sounded by Prof. C. N. Rao, the PM’s Scientific Advisor, and this has resulted in evolving an action plan at the highest level with the following objectives:

Selected few to be handsomely funded so that they attain international standards;  demand performance from individuals and institutions after providing necessary funds; create an autonomous research foundation to take care of all aspect of scientific research;

initiate a massive programme of rejuvenation of state and central universities; encourage top talent from all corners of the country to enter the field of pure science and also encourage young scientists in research work in all possible ways; and  provide freedom of operation to scientists, universities and scientific institutions.

Scientific innovations in key areas such as power (atomic power), defence, biotechnology, pharma, IT and mining sectors are imperative for the country at this juncture. To emerge as a world leader in the true sense, there is need for sustained research in the above areas, responsibility for which has to be shared jointly by the government and the private sector. For a country to emerge big and strong R&D has to be given priority and more funds allocated for this purpose under different heads so that the benefits of research reach society, both rural and urban and industrial and agricultural.---INFA

 (Copyright, India News and Feature Alliance)

Open Forum

New Delhi, 22 November 2006

India’s Child Labour

THE PROBLEM AND ITS SOLUTION

By T.D. Jagadesan

In 1985 the issue of child labour in India attracted public attention and debate; it has become the focus of major concern in the aftermath of globalization in 1991: “Child” is defined by the Constitution of India (Article 24) as anyone below the age of 14 years.  According to the United Nations Convention on the Rights of the Child (Article 1) it is anyone below the age of 18 years.

As per the Indian Constitution, no child below 14 years of age shall be employed to work in any factory of any hazardous employment (Article 24).  “Childhood and growth are to be protected against exploitation and moral and material abandonment” (Article 39f) and “The state shall endeavour to provide free and compulsory education for all children until they complete the age of 14 years” (Article 45)

The Child Labour (Prohibition and Regulation) Act was enacted in 1986.  As per the Act, “Child means a person who has not completed 14 years of age. The Act regulates the condition of employment in all occupations and processes not prohibited under the Act.

The Act prohibits employment of children in 13 occupations and 57 processes contained in the Act. Any person who employs any child in contravention of the provisions of the Act is liable for punishment with imprisonment for a term which shall not be less than three months but which may extend to one year or with fine not be less than Rs.10,000/- but which may extend to Rs.20,000/- or both.

The National Policy on Child Labour (NCLP) was framed in August, 1987.  This policy contains the plan for solving the problem of child labour.  The NCLP started a scheme in 1988 to rehabilitate child labour.  Under the scheme, after a survey of child labour engaged in hazardous occupation and processes has been conducted. Children are to be withdrawn from these occupations and then put into special schools in order to enable them to be mainstreamed into formal schooling system.

Data provided by the National Sample Survey depicts child labour as 3.8 per cent in 1999-2000, while according to Census data it was 53 per cent in 1991.  Interpretation of data from NFHS (National Family Health Survey) on all-India basis shows that incidence of child labour in rural areas is 4 per cent in comparison to urban areas, which has 1.7 per cent. Some States have higher rate of incidence in rural areas.  These are Andhra Pradesh, Gujarat, Karnataka, Mdahya Pradesh, Rajasthan. Karnataka, Orissa, Assam, Andhra Pradesh were found to be leading in child labour in urban area.

The number of child labour is on the rise in India.  Most of the social scientists argued and accepted that prima facie this trend is associated with poverty and illiteracy.  Some other factor are: large families with only one working parent or adult; migration; it can be by force or in look out for work and employment; traditional family occupation; ineffective law enforcement; and wage structure of adult workers.

It is a shame that almost less than half of India’s children between the age of six and fourteen, that is 82.2 million, are not where they should be in school. Most of them stay back at home either to work, or to attend to cattle, younger siblings and working in fields.

The survey conducted and data collected by the N.F.H.S. (National Family Health Survey) shows that the poverty alone is not responsible for children to be indoctrinated as labourers.  Around 50.84 per cent of child labour belongs to low standard of living category, while 42.74 per cent belong to the medium standard of living category at all India level.

Child labourers are divided in four major sectors. These are: cultivators, agricultural labourers, manufacturing in household industries and others which includes construction workers etc.  At the national level, most of the child labour involved in an unorgnaised sectors where these children are losing their childhood.

Census data 1991 shows that child labour is concentrated in agricultural sectors constituting around 78 per cent of boys and 83 per cent of girls as cultivators and agricultural labourers.  Child labour employed in intrinsically hazardous occupation handling dangerous chemicals, equipment which may lead to burn or damage of limbs as handling explosive in fire work factories, match-making factories.

A decision has been taken on the recommendation of the Technical Advisory Committee on child labour, headed by the Director General, ICMR, that the children employed in roadside eateries and highway dhabas were the most vulnerable lot and were easy prey to sex and drug abuse as they come in contact with all kinds of people.

Regular exhaustive studies should be undertaken.  Baseline survey should be conducted so that they may help in research work while in turn form a reliable data bank upon which planners and policy makers can rely and thus can formulate programmes and policies to not only obliterate child labour but can work out plans for the growth and development of children of our country.

Voluntary organizations should also be roped in by forming an apex body comprising of government authority and incorporating voluntary organizations working in these fields. Members of management, trade unions can be involved to seek solutions to the problems of labours.

Above all, the Government and legal machinery should evaluate and monitor all progarmmes initiated by the Government pertaining to children; they ensure that the children should be benefited by these programmes, its enforceability and utilization. The need of the hour is to attract public attention, to involve everybody in this fight against child labour use and to make child labour a matter of public concern by giving impetus to the cases highlighting action against child labour.

Mass media, print media and electronic media should also play an important role in bringing back the lost childhood of child labour and to create awareness so that no child falls in this quagmire. We need to get down to action, creating a new version for the children for whom we are responsible and who look up to us with hope. ---INFA

 (Copyright, India News and Feature Alliance)

Open Forum

New Delhi, 16 November 2006

Farmers’ Suicides

SOLUTION: WRITE OFF THEIR DEBTS

By T.D. Jagadesan

The gruesome news that Vidarbha, an economically backward region of Maharashtra, has recorded more than 10,000 cases of suicides by farmers since June 2005, is a striking example of the mismatch between the GDP growth and wealth distribution in India. Agriculture has become the weakest segment of the economy and the small and marginal farmers have been sidelined.

Only a few of them are able to earn enough to cover the costs; they incur in production, while others remains steeped in debts. One may ask why they are continuing in this occupation when they are incurring loses.  But the counter question is, what else they can do with their low level of skills for any other occupation and the unemployment in rural areas.

They have been living in the hope that brighter days will dawn as promised to them by every political party that seeks their votes, but now they see no sign of such days ever coming for them. On the other hand, their todays are getting worse than their yesterdays. The Government announces “packages” of assistance giving the farmers the hope that they will help in lifting them up from their miserable plight.

But the benefits of these packages trickle down very slowly to them, if they do at all, and when their hopes snap, the desperate among them resort to ending their lives as the only option open to them.  In this context, the Prime Minister’s statement last month about the need for “fundamentally new perspective on rural development and agriculture” sounds a hopeful note.

He has acknowledged that Indian agriculture is in crisis and “the real challenge of the next decade is to pull out subsistence farmers from their marginal existence and propel the advanced farmers on to the global platform”.  This article will not go into what requires to be done for the agricultural sector as a whole as it is focused on the immediate action required to relieve the distress of the small and marginal farmers. They have been hoping for a long time for a new set of policies and programmes.

They have no time and energy left to wait for the promised comprehensive plan for the entire community of farmers.  All experts who have gone into the incidents of suicides have come to the conclusion that the single important factor that has prompted them to take their lives is their debt burden which has become unbearable for them.

No sane person will think of ending his life if he has any other alternative.  Others may think it is foolish on the part of the farmers to end their lives. They may call it foolish or desperate, but one should not overlook the fact that such macabre acts have taken place on a large scale and in several parts of the country.

In fact, the foolishness will be on the part of those who think that the crisis facing the small farmers is a temporary phenomenon and that it will pass away soon. If bold remedies matching the gravity of the problem are not taken most urgently by the Government, the problem will become too intractable for any solution later.

Two urgent measures, according to economic pundits, have to be taken to address the distress of the farmers: one, a clean write-off of all the debts they owe to the banking institution, and two, cancellation of all loans and the interests they owe to moneylenders who have been conducting their operations illegally.  These steps may be criticized by some people as unjustifiable subsidy to an unviable sector.

There is an impression in some sections of the media and the public that the farmers in India have been pampered too much by concession and subsidies from the Government and it will be bad economics and even poor politics to increase the quantum of subsidies to them.  But the fact is that the Indian farmer receives the least degree of support from the state in the form of subsidies.

The farmer in the United States gets subsidies not only for cultivating his land but also for not cultivating if such restraints on production are found necessary to prevent depression of prices. It is estimated that the US farmers, are able to export wheat at prices 56 per cent below their cost because of subsidies from the Government.

Obviously, Indian farmers cannot expect to get subsidies at rates anywhere near those received by farmers in developed countries. But no one should ignore the fact that a large percentage of the farmers in India own less than one hectare each, and if proper attention is not paid to the acute distress of such a large section of the population the whole society will have to pay the penalty for such a neglect.

The reasonableness of a write-off of loan to such people will become more convincing when we take into account the fact that the non-performing assets of the public sector banks of India sources.  Any measure of relief to the small and marginal farmers without a clean write-off of their existing debts will become only a token gesture, as the results of the “packages” of assistance already given have shown.

Equally important, according to a school of thought, is the need for simultaneous arrangements for advancing loans at soft rates of interest to small and medium farmers. Eminent agricultural experts like Dr. M.S. Swaminathan have suggested that 4 per cent will be a reasonable rate of interest for loans to small and marginal farmers in their present state of acute distress.

The subsidies involved in such measures may prima facie appear to be a dead loss to the Government, but in the long run they will prove to be beneficial to the entire economy.  If we agree that pulling out the subsistence farmers from their marginal existence is the real challenge of the decade, as stated by the Prime Minister, quick action on these lines cannot be postponed any further.---INFA

 (Copyright, India News and Feature Alliance)