Photo: Mint
Photo: Mint

NFR: Need for clarity on role, power of executing agencies

Rather than implementing NFR , the railways has passed on the ball to zones ... it will cripple decision-making

Indian Railways’ share of non-fare revenue (NFR) earned, as a percentage of total revenue, is around 5%, and is much lower than the 10-20% NFR earned by global railway companies or organizations. Railways has come out with its policy document titled, New Innovative Non-Fare Revenue Ideas Scheme, to support the achievement of its target of raising about 15,000 crore NFR in the next 10 years and monetize its assets.

This policy aims at decentralization of powers in NFR matters, by empowering general manager of zones to take decisions in these regards. While this step shows intent, it does not solve the underlying issues causing the non-realization of NFR potential lying with Indian Railways.

In a government set-up such as the railways in India, pure policies—without precedence—hardly create an impact. A case in point is the corporate social responsibilities (CSR) guidelines of the railways, which had given power to zones to take decisions on relevant matters. More than 3 years after the guidelines got published in September 2014, only 20-40 crore worth of CSR projects had got completed.

This was in a scenario where corporates had unused CSR funds to the tune of 10,000 crore. A key reason for this was that zones did not have clarity on what kind of projects they could approve and, as is the case with a bureaucratic set-up, did not have examples to emulate.

Such examples are expected to be provided by the policymaking entity through centralized implementation in the initial stages to give confidence to executing agencies.

A similar situation exists now for NFR. Rather than providing those examples through strong central implementation of NFR, the railways has again taken the decentralization route, and passed the ball to zones—and they again, will suffer from lack of guiding precedence. Every decision will seem to be “bold" at zonal levels and will cripple decision making.

This ideal situation notwithstanding, zonal level decision making has its own challenges in the way things get implemented. While powers get passed to zonal railways, clear targets are not assigned, which leaves implementation success dependent on initiative of GMs and their teams, and their interpretation.

Moreover, areas such as NFR require coordination across multiple departments of Indian Railways, and the so-called single window systems hardly work in reality. The initiative approval may get coordinated by the single window. However, for implementation, the agencies get stuck across the various departments of the railways.

Lack of a structured central monitoring mechanism using IT tools and dashboards, which can assess performance of zones against set targets, and play the role of an active arbitrator in case of issues, delays projects. The new NFR policy struggles on this count as well—with decentralization, the Indian Railways has not taken care of target setting and putting in place a strong central monitoring mechanism.

Moreover, there is a need to realize that reaching the target of 10-20% of NFR requires the railways to monetize its land, its most critical asset, better. As Indian Railways goes for station modernization, it must definitely target higher levels of NFR from the new stations. On the existing stations, it must think of policies to enhance the vertical utilization of space for rewarding commercial activities. NFR policies of the railways have been silent on these counts as well.

With its vast expanse, assets and reach, Indian Railways has a strong opportunity to supplement its revenue through non-fare measures. However, it will require central teams to show the path through “bold" decisions, strong implementation and prioritizing the right assets for exploitation!

Nishant Nishchal is principal at AT Kearney.

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