THE LEADER ARTICLE: Changing Track: Rail Budget Should Acknowledge New Realities

Each year, as the Rail Budget draws near, the travelling public and business community apprehends high fares and freight rates. Therefore, the railway minister should confound rail users and budget critics alike by reducing tariffs.
The minister should consider the fact that new technologies have enabled other service sectors to reduce tariffs. Transportation costs, transaction costs and tariff walls have tumbled.Air freight and ocean freight rates have dropped, as have telephone tariffs. Taxes and duties have been substantially reduced. The pressures of global competition as well as evolving technologies have forced industries to innovate, upgrade product quality and reduce costs. The average freight rate per net tonne kilometre (NTKM) in US railroads was 3.5 cents in 1980; it dropped to just 1.5 cents per NTKM in 2000.
However, IR''s metre gauge network constitutes 23 per cent of its overall route network but accounts for just 0.78 per cent of freight output and only 6.7 per cent of passenger output. There is an obvious need to activate the MG network. Likewise, the narrow gauge system can be separated, localised, concessioned or privatised. Railways complain of a loss of Rs 461 crore sustained in 2002-03 on 115 uneconomic branch lines. The Rail Reforms Committee had suggested at least 40 of them be closed. IR dithered, and only some 15 of them have so far been shut down.
At present, freight cars run for barely one-third of the time. The rest of the time is spent on examination, repairs or at terminals. Their usage must be optimised. The annual freight output per wagon on IR is way lower than in China. Aggressive airlines like Southwest, EasyJet and our own Air Deccan have shown how simple innovations can improve asset utilisation and save costs. There is scope to substantially reduce wastages on account of asset failures — track, rolling stock, signalling and overhead electric wire.
A crusade to realise this objective will help add at least 10 per cent of IR''s effective carrying capacity, and annually save about Rs 1,000 crore. A rigorous revamp of repair and maintenance infrastructure will similarly help derive substantial savings. There is a need to rationalise the geographical as well as scheduling parameters of IR''s 45 major workshops, some 100 locomotive sheds, and almost 300 sick lines and repair depots for coaches and wagons. Further, a 10 per cent reduction in annual stores and equipment costs, by way of proper inventory management and rationalisation of procurement, will help save Rs 1,200 crore in a year.
With about 423,000 hectares, including at least 20,000 hectares lying vacant, the Railways are sitting pretty on a gold mine of prime realty, particularly in large urban areas.
Workforce rationalisation can prune costs in a big way. Of a total of 15 lakh staff, involving an annual wage bill of Rs 20,000 crore, almost six lakh of them are group ''D'' — khalasis, gangmen, attendants and helpers. In an age of high technology and knowledge economy, IR''s workforce composition seems ridiculous. This would call for a strategy to first freeze any further induction in the above categories. To bring down the overall IR numbers, a beginning must be made at the senior management. A bold step would be to roll back the proliferation of railway zones. China''s railway zonal system is being streamlined and compressed from 14 to a maximum of five administrations.
Contrary to a general impression that all rail passenger travel is loss-making and subsidised, it is only the second class sleeper and ordinary services which incur a loss (Rs 3,882 crore in 2002-03). All air- conditioned services make a profit. Of a total of some 9,000 passenger trains which IR operates daily, about 3,500 are ordinary passenger and mixed trains, accounting for 30 per cent of overall passenger kilometres, which are a serious drag on IR finances. A paltry earning of 14 paise per passenger km accrues to IR from second class ordinary passenger services compared to 243 paise from AC I, 110 paise from AC 2-tier, and 26 paise per km from mail and express se-cond class sleeper services.
These slow-moving passenger trains erode precious capacity on busy trunk routes. Bus services for short-distance passengers is an obvious alternative. With budget airlines and new inter-city bus services emerging as options, IR, too, should improve the quality of inter-city rail travel, reduce cost and augment capacity. IR should go in for high-capacity freight cars, higher horse power locomotives and longer and heavier trailing loads.
It is essential for IR to substantially increase its top line. Its freight business is the veritable goose that lays the golden eggs. IR needs to sort out its skewed tariff structure. It needs to initiate innovative door-to-door logistics solutions in conjunction with private sector, providing facilities for consolidation and warehousing. Private sidings are an invaluable asset, which should be utilised to secure considerable general goods traffic business from large consumers. IR now needs to plan segregated passenger and rail corridors on high-capacity routes. IR must also encourage double-stack container carrying trains.
We need to disprove Milton Friedman who wrote way back in 1980, "Governments never learn. Only people learn". There is a brave new world out there to be conquered, Mr Minister.