From PPP to organisational changes, a tight rope walk for Ashwini Vaishnaw

Union railway minister Ashwini Vaishnaw has completed three months in office but the Indian Railways that was at the crossroads of getting in more private investment into the system is still not full steam into it despite his predecessor Piyush Goyal’s push.

One of the key challenges is to pick up the thread for private trains, tender for which was designed during Goyal’s tenure, but had to be discharged due to tepid response. Where the Indian Railways did move ahead, however, was station redevelopment which was largely pursued through Indian Railways Stations Development Corporation, a joint venture of Ircon and RITES.

The corporation oversaw the completion of the Habibganj and Gandhi Nagar station modernisation projects. It was also taking up the modernisation of the Bijwasan railway station. IRSDC, however, is in the process of being shut down in line with the Sanjeev Sanyal committee report that the Union government adopted recently. The redevelopment work would be carried out by the zonal railways themselves post the shutting down of IRSDC.

Electrification of 68,155 route kilometre (RKM) broad-gauge railway routes by December 2023 is nearing completion. According to an official release from September 2018, the electrification of sections covered under the Cabinet Committee on Economic Affairs decision was to result in net savings of Rs 3,793 crore annually.

The projected cost saving is much higher today diesel was around Rs 70 to Rs 75 a litre during the period of these initial estimates but is now retailing close to Rs 100 a litre in parts of the country. The average retail price of diesel has zoomed and this means more expensive operations for the Indian Railways that earmarked Rs 11,000 crore for buying diesel for the current year.

According to latest data, 46,677 route kilometre (rkm) of track elect­ri­fication has been achieved of which 796 rkm has been done dur­ing 2021-22. The target for this financial year is 8,000 rkm (the highest ever) out of which the Central Organisation for Railway Electrification (CORE) has been tasked with electrifying 6,000 rkm.

This is a taller target than before with electrification of 6,015 rkm being achieved in 2021-21 and 5,276 rkm in 2019-20, an annual record being set in both years. If achieved, a new record would be attained this year too.

While there are other railway institutions that are also conducting the electrification, the largest share of this responsibility lies on the shoulders of CORE. “Nine of our project units are committed to achieve 100 per cent electrification of the Indian Railways network by December 2023,” Y P Singh, general manager of CORE, told Business Standard.

In addition to modernising the railway infrastructure, the electrification would offset pollution and bring the national transporter closer to its aim of becoming a ‘net-zero carbon emitter’ by 2030. This also requires more deployment of renewable energy. This has been a challenging area for the Railways that has a goal of setting up 20 GW of solar energy generation capacity on surplus land and land along the tracks. Despite multiple bid extensions, renewable energy project developers have not been very enthused by the proposals.

But these energy focused initiatives would not be enough to pull the Indian Railways out of the financial difficulty. There is dire need to improve freight earnings, something that has been working in Vaishnaw’s favour. According to Rail Ministry data, freight revenue in September 2021 stood at Rs 10,815.73 crore, 9.19 per cent higher than Rs 9,905.69 crore earned in September 2020. Earnings from freight traffic in 2021-22 till September 2021 rose to Rs 66,609 crore on a cumulative basis which was 32.73 per cent higher than Rs 50,184.18 crore during the same period of the previous financial year. If this trend continued, it would mean an improvement in operating ratio, a measure of the financial performance of the Indian Railways.

The New Bhaupur - New Khurja Section of dedicated freight corridors (DFCs) that was inaugurated on December 29, 2020 while the Rewari — Madar Section operationalised on January 7, 2021 have helped in increasing freight loading. The Dedicated Freight Corridor Corporation of India has started consultations to develop a section of the corridor under public private partnership mode, hoping to rake in more revenues.

Despite all these efforts, earnings alone cannot turnaround the Railways that has been adjusting its advance payments for managing operating ratio (OR) to present better optics. Nearly 70 per cent of the Indian Railway’s expenses are staff costs, which are perceived as a drag on the budget.

The committee under Sanyal, the principal economic advisor, the Ministry of Finance, has recommended a turnaround strategy that includes exiting non-core activities and introducing more public-private partnerships in activities such as running the 94 railway schools and 125 hospitals. Seven central training institutes (CTIs) are to merge into the National Rail and Transportation Institute which could help in ‘significantly’ reducing training costs.

Sanyal also has far-reaching recommendations for the Railway Public Sector Undertakings (PSUs). He has proposed winding up CORE once the electrification is complete, and the Railway Recruitment Control Board (RRCB), the Central Organisation for Modernisation of Workshops, and the Indian Railways Organisation for Alternate Fuels (IROAF). Of these, IROAF has already shut shop, but shutting down other organisations of the railways will not be that easy.

Sanyal has also proposed winding up the Centre for Railway Information Systems (CRIS) and giving its work to Indian Railway Catering and Tourism Corporation (IRCTC), a PSU whose core function is internet ticketing. Further, RailTel Corporation, a PSU that largely provides enterprise services to other PSUs, is also proposed to be merged with IRCTC.

These recommendations have riled up employees in most PSUs. It will be a tightrope for Vaishnaw to walk who has been taking a while to merge the Railways existing eight group A services into a single service called Indian Railway Management Service. This move was approved by the Cabinet in 2019 but is nowhere near implementation.