Railways and a question of transparency

Recent developments

• Doing away with separate Budget for Railways in 2016.
• Increased freight earnings in 2020-21 as compared to 2019-20 despite the COVID-19 pandemic.

Issues with railways

• Low freight earnings: Compared to 2018-19 – Rs 1,24,184.00 crore projected in the Revised Estimates for 2020-­21.
  • Lower than what was achieved in 2018­-19 (Rs 1,27,432.72 crore).
• Operating Ratio (OR), artificially kept below 100%: By making less-than-required provision for pension payments during 2019-20 and 2020-21.
  • Official figures for OR are 98.36% for 2019-20 and 96.96% for 2020-21, whereas actual OR works out to be 114.19% and 131.49%.
• Under-provisioning: Unable to adequately provide for Pension Fund, both for 2019-20 and 2020-21.
• Unprecedented rise in expenses: unable to keep pace with staff costs and pension payments.
  • While passenger and freight revenues increased by 84.8 % from 2010-11 to 2019-20, the staff and pension costs raced ahead at 157%.
  • Reason: Implementation of Central Pay Commission recommendations.
• Overwhelming dependence of freight on coal: 50% of freight earnings contributed by coal transport.
  • Challenge: With the availability of alternative sources of renewable energy, dependence on coal-based thermal power plants bound to reduce. (India being a signatory to Paris Climate Agreement)

Way Forward

• Life after coal: E.g. Adoption of a roll-on roll-off model of transporting loaded trucks on the rail can boost revenues and reduce overall carbon footprint.
• Privatisation:
  • Corporatise Railways’s Production Units and Outsource medical services.
  • Invite private players to operate passenger and freight services
• Cadre management reforms: Merging all cadres and (like the announcement of a single Indian Railways management cadre) to eliminate “departmentalism”.
• Full commissioning of two Dedicated Freight Corridors (DFCs): Slated to be operational by 2022.
• Develop ‘Indian Railways Report’: on lines of annual Economic Survey be placed in Parliament every year detailing the physical and financial performance of the Railways.