Events
& Issues
New
Delhi, 27 November 2019
Railway
Corporatization
WILL IT IMPROVE
EFFICIENCY?
By Dhurjati Mukherjee
There has been much talk of bringing
necessary reforms in railways so as to gear up efficiency. As is well known,
Indian railways is one of the biggest in the world covering almost the length
and breadth of the country. It has massive infrastructure, divided into several
regional set-ups. Moreover, poor people use trains to travel, not just within
their State but also commute to other States due to a very reasonable fare
structure.
According to latest reports, the Government
is considering a proposal to set up either an umbrella company to manage all
its rolling stocks, production factories or alternately two public sector
enterprises, one for locomotive manufacturing and the other for coaches and
wheels. Though the idea does not look bad, it has to be ensured that there is
the right professionalism which can be possible by induction of young and
talented engineers. Obviously, old railway officials should not find a place in
these units.
Importantly, technological changes are
already being inducted into the railways to ensure faster trains. It has been
realized that though the railways is huge, the running of trains is one of the
slowest in the world. Thus, with technology being a key input, this has to be
handled by a team from the IITs and other such bodies that are sufficiently
equipped.
Many believe that the authorities want to
privatise rolling stock manufacturing of the railways. It is difficult to
predict what will eventually happen but one is reminded of the privatization of
railway public sector undertakings (PSUs) such as Burn Standard and Jessop and
their pathetic results are well known. It needs to be underscored that there is
lack of professionalism in the country’s private sector which just wants to
cash in on land and other assets of public sector units which are put up for
sale. There is rarely an example where a languishing PSU has been nurtured to
health and revived by induction of technology and modernization by any private
party.
In recent years, the Government has stepped
up disinvestment in PSUs, like never before, clearly, to cash in on large funds
to support its uncovered budget expenditure and keep the fiscal deficit low.
While this might find support, it also has to be ensured that, in case there is
a private party, its role should be to modernize operations and increase
productivity. But unfortunately this does not happen.
According to available figures, the railway’s
rolling stock consisted of 277,987 freight wagons, 70,937 coaches and 11,452
locomotives. Apart from production for captive use by the railways, the
production units also export rolling stocks and components to several destinations
like Bangladesh, Sri Lanka, Hungary, Myanmar, East Africa and Central and East
Asian countries. With induction of new technology in wagon manufacturing and
locomotives, India could make a dent in new markets.
Meanwhile, a new public sector structured
company called the Indian Railway Rolling Stock Company (IRRSC), which has been
formed is the holding unit of locomotives and rolling stock along the lines of
China’s state-owned CRRC Group. This is part of Railway Minister Piyush Goyal’s100
day roadmap document for the national transporter. Noticeably, the objective is
to use the new entity to drive technology partnership and modernization for
world-standard coaches and locomotives production.
A detailed study will be conducted of seven
of its production units, namely, West Bengal’s
Chittaranjan Locomotive Works (CLW) , Integral Coach Factory (ICF) in
Chennai, Kapurthala’s Rail Coach Factory (RCF), Diesel Modernization Works
(DMW) in Patiala, Diesel Locomotive Works (DLW) in Varanasi, Wheel & Axle
Plant in Bangalore, and Modern Coach Factory (MCF) in Rae Bareli.
It is understood that under the Government’s ‘Make in India’ initiative, new
concepts such as extensive use of Robotics, automation etc. are being
implemented. In addition, new generation safer LHB coaches are being
manufactured in the factory, contributing to the railways and passengers
safety.
Besides, accusations of privatization have
been vehemently denied by the Railway Minister. Recall, during Parliament’s Budget
session, Goyal stated that the railways cannot be privatized. However, “if we
have to increase the facilities in railways, we obviously need investments for
it. We have taken a decision to encourage public-private partnerships and we
will also corporatize some units”.
Undeniably, the Government is giving
attention to the development of railways. A case in point is the work for a Dedicated
Freight Corridor which started in 2007. True, from 2007 to 2014, not even one
kilometre of track linking was done but during the last five years around 1900
kms of track linking has been completed. The participation of the Asian
Development Bank and the Japan International Cooperative Agency in this as also
for the high speed rail corridor has greatly helped.
Notably, the railways contribute around 2.9%
of the country’s gross domestic product. Consequently, modernizing and
expanding railways is essential at this juncture. Be it the running of trains
or induction of modern and efficient locomotives and coaches (like production
of Linke Hofmann Busch) or 100% electrification or increasing level crossings
and foot bridges and modern signaling to minimize accidents or maintenance of
rolling stock, all these are important. For this, foreign collaborations have
been signed but more investments from partner countries are needed.
Pertinently, developing countries are heavily
dependent on financial institutions as also developed countries for funding of
various types of infrastructure, specially railways. The mushrooming of metro
rail networks has also been carried out with foreign funding while technical
expertise has been mostly indigenous.
The corporatization of the railways might be
in the right direction but there should be serious thinking before going in for
privatization. The private sector in India is only after profit and has no
interest whatsoever in sincerely participating in railway development which is
a great obligation to the country. Only units which are highly profitable like
IRCTC or the vast land development of the railways might interest them.
In sum, our policy makers need to remember the
economically weaker sections and lower income groups are the major beneficiaries
of the railway network and hence expanding and strengthening it would greatly
help the national cause. One hopes India is well poised to create its position
amongst the global railway systems. ----- INFA
(Copyright, India
News & Feature Alliance)
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