The Indian Railways is cash-strapped, accident-prone and suffering from slow revenue growth. It is also the single most important element in the domestic transport infrastructure and it has ambitious plans. If all goes well, it should pull out of this trough and become a more modern, safer and financially sustainable organisation.
The 2017-18 financials are the worst in 17 years with IR’s operating ratio hitting almost 99 per cent and the ratio has only become worse over the years. IR has actually been able to control its expenditure on the energy front with a series of initiatives that make it more energy efficient. However, it has a bloated workforce and the latest Pay Commission recommendations have led to a substantial expansion in the wage bill.
Growth in both freight and passenger traffic volumes and in revenues has been anaemic for some time. The accident record has improved but it still leaves a lot to be desired. Apart from enhanced targets for doubling lines, gauge conversions, etc., major projects like the dedicated freight corridor, the expansions in the Northeast and the planned network of high speed lines should eventually lead to volume expansions. But progress on expansion has been slowed by the financial constraints as well as the usual problems regarding land acquisition. A substantial amount has also been sanctioned to improve safety by the induction of modern equipment, retraining of staff, better communications, etc. This will, however, take time.
IR is urgently looking for new revenue streams and for options to raise more money for capital investment by tapping the bond market and lenders such as LIC, as well as seeking multilateral funding via the World Bank. It is also trying to encourage private participation in multiple areas including station redevelopment. There are plans to disinvest five subsidiaries, which will enable IR to raise cash by listing them on the stock exchange. If economic growth picks up, that too will also boost volumes for sure.
The proactive nature of these plans and their scale offers hope. However, apart from effective implementation of the expansions, it will require a paradigm shift for IR to become a modern twenty- first century organisation. It must deploy its workforce more efficiently and interact more effectively with the private sector to go forward as a sustainable service provider.