New govt will have huge task in turning around railways

| May 19, 2014

The incoming BJP government faces a mammoth task in turning the cash-strapped railways into a growth engine by infusing fundamental reforms as it will be crucial to PM-designate Narendra Modi’s promise to accelerate economic growth which has remained stuck at under-5%, the slowest in a decade. 

There is also huge curiosity on who gets to head the key infrastructure portfolio which was a victim of coalition politics as regional subedars in their pursuit of populism derailed the railways in the last two decades. 

The clear mandate in favour of Modi-led BJP has allayed fears among economists and officials that this time too, the railways might go to a coalition partner. 

During campaigning, Modi had branded the railways as a potential “engine for India’s growth”. Though he did not outline any specific plan, his views were reflected in BJP’s election manifesto which proposed bullet trains as part of the party’s plans to spruce up India’s infrastructure. “We will launch Diamond Quadrilateral project of high speed train network (bullet train),” the manifesto said. 

Turning the national transporter into an engine of growth requires fundamental reforms and as railway reforms are difficult in nature, it will need strong leadership and political will. It will also have to factor in the 14 lakh employees, who are banded into strong employees’ unions. 

But the key to getting the railways back on track is a strong leader who can bring investment, both public and private, and pursue a reforms agenda. 

Also, he or she should have the stature to force the government to increase investment in railways though it should come with a rider that funds would be used on remunerative works and would not be directed in meeting political demands. 

The railways, faced with a financial crunch, has failed to manage funds for modernization and expansion after paying its staff, fuel and pension bills. Projects worth more than Rs 1 lakh crore is pending. Safety is also taking a back seat. 

The new minister has to take a call on matters such as corporatization of railways by setting up Indian Railways Corporation and a truly independent Indian Rail Regulatory Authority (IRRA). 

Other suggestions include restructuring and downsizing the railway board and pushing incremental reforms such as dynamic pricing, setting up of an independent tariff regulator, shifting to commercial accounting practices, attracting more private investment and spinning off the services function of railways. 

“Railways needs to have a certain discipline,” an official said, adding that introducing reforms was not possible as regional satraps in charge of the ministry failed to take bold initiatives which could put the state-run transporter on the modernization path. 

Category: Indian Railways

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