The challenge is to monetize all resources, including data: Suresh Prabhu8 min read . Updated: 23 Dec 2015, 12:27 AM IST
Railways minister speaks about the human face of the organization, a corporate plan for the next 5-10 years and Vision 2030 that will take the cash-strapped railways to better days
New Delhi: Commissioning stalled projects, delegation of authority, moving tenders online and forging joint ventures with state governments are some of the achievements of railways minister Suresh Prabhu after he took charge of the national transporter. However, Indian Railways has often found itself amid controversy, be it due to the recent demolition of a slum on its land in Delhi or its quality of finances. In an interview, Prabhu spoke about the human face of the organization, a corporate plan for the next 5-10 years and Vision 2030 that would take the cash-strapped railways to better days. Edited excerpts:
The railways face the problem of encroachment of land across the country. The incident in Delhi (Shakur Basti demolition) attracted a political backlash. How will you disentangle the whole issue?
I was not aware of what happened in Delhi as it is done at the level of DRM (divisional railway manager). Having said that, this kind of exercise should be done with a more humane approach and not done during the winter, and this has been instructed to all officials across the country. Encroachments cannot be removed in an inhuman way and question of eviction by force is absolutely out of the question.
At the same time, it should also be considered that why is it done. Is it done to build someone’s private property or public infrastructure? As a nation which includes all sections of the society, we must come to a conclusion on whether we want to develop the public infrastructure or not. No infrastructure in the world has been developed without land. If you do not have land, airports, sea ports, nothing can be built. The other point that we are trying to ensure is that encroachment should not happen in the first place and that is why we are digitizing all our land records. It has been communicated that a person responsible for digitization of land will also be held responsible for encroachment.
All this being done, but state governments, central government, all political parties and all other stakeholders should join hands. I am trying to reinvent the entire railways system and pressurizing my entire administration to ensure that they are more people-friendly.
Passengers face a lot of problems. What are you doing to be people-friendly?
You must understand that we are running a commercial organization. It must have a proper strategy to bring customers and retain customers. If you do not offer services and provide proper delivery, how can we run the organization? With that view, between 26 May and 9 June, we organized customers’ pakhwada (fortnight). In that period, general managers, DRMs, board members and the chairman (of the railway board) travelled in the normal class. They went and met thousands of customers. The result was they got sensitized to the problem of the common people.
Railway finances are under stress and it will increase once the Seventh Pay Commission recommendations are implemented. How are you addressing this?
Anywhere in the world, railway operations are profitable largely because 30-40% of total revenue of railways comes from non-railway operations. In India, it is not even 1-2%. So, every time opinion is given to increase customer fare, this is like saying that because my cost has increased, because it has gone up by ₹ 30,000-40,000 crore a year (due to 7th Pay Commission recommendations), I must pass it on to the customer. What has the customer gained because my salary has increased? Transferring cost and loading it on service delivery is not a reform. The reform can happen only when there is a system whereby you actually optimize the operations. That is why we are thinking of creating a regulatory framework for which the draft is ready.
Also, customers are a captive audience. They provide an opportunity with their eyeballs and footfalls. If you can monetize it, the amount of money that you can get is huge. We are such a large country; if we tap our customers, we can even exceed (the) global average of 30-40% for non-railway activities.
So, the challenge is monetizing all resources, including data. We never had a data analytical wing which we are now trying to create. IRCTC (Indian Railway Catering and Tourism Corporation, which does online bookings) provides us a huge opportunity because it gets highest number of hits on its website. We are trying to monetize land by redeveloping railway stations. If we use the land and air space, with the same area we can make money without selling the land. This is will not only improve customer service but also improve other sources of income through letting out of properties.
You mentioned all stakeholders being on the same page. Given the obstructive politics where even parliamentary business cannot be conducted, how will you manage to implement what you plan?
So far, I have not faced this problem. I am getting full support and we are very soon signing agreement with all major states and forging joint ventures for projects specific to those states. They are fully cooperating. We even have states where the opposition is in the power.
To create a railways regulator, will you need a law? Is there a timeline?
It may require to execute an Act but there is no timeline to it.
The Bibek Debroy committee suggested a timeline of two years.
I presented my budget on 26 February. The Debroy committee report came in June. In the budget, I already said we will bring in accounting reforms, we will create a finance cell; I talked about regulatory framework. These were my budget commitments that I am fulfilling. I made those commitments four months before the committee report came. I have nothing against the committee and both Bibek Debroy and I are on the same page. The committee has given a time of two years, but I will try to do it sooner.
What are the major challenges before the railways?
Money, which was always a cause for projects not getting completed, is no more a problem with railways. Now, money is available. The challenge is the new development (Pay Commission), which is putting a burden on the revenue account and the decreasing freight which we are losing to the roadways. Our focus is now creating infrastructure so that rail can win back from roadways.
The parliamentary committee on railways has raised concerns over finances, especially the investment of 8.5 trillion over the next five years, which involves borrowing. What do you think about it?
Out of our capital investment of ₹ 8.5 trillion, borrowing is just ₹ 2-3 trillion, which I think is nominal. Nowhere in the world infrastructure is created from current revenue of the government. What we are doing now was needed 20 years back. But we didn’t do, and as a result it all got accumulated. Investment can’t be postponed anymore. There is nothing wrong in borrowing, provided you put it in productive assets like we are doing.
How have you fared on your budget promises?
I would define my budget promises into two categories. In budget and out-of-the budget. We have fulfilled our promises made in the budget and apart from it a lot of out-of-the budget promises. I never talked about electric and locomotives factory and bullet train in my budget, but we still did it.
We have allotted contracts worth ₹ 40,000 crore for diesel and electric locomotives. Freight corridors worth ₹ 82,000 crore which were not approved by the cabinet; we got it approved and issued tenders worth ₹ 19,000 crore in the last one year. Apart from it, we have done joint ventures with PSUs (public sector units), state governments and doing a lot that would bring money to the market. In fact, 3-4 large tenders are under negotiations for manufacturing of rolling stocks and all these big projects will bring money to the market.
We have made a corporate plan for 5-10 years and Vision 2030 that would take railways to a new height but it would require three-four cycles of five-year planning.
Why are you forging joint ventures (JVs) with state governments?
Whenever railways has to do any project in any state, we have to do everything; acquisition of land, permissions from the state and local authorities, finding money, forest clearance, labour arrangement, etc. Besides, state governments always used to complain that they are victimized. So, we have tried to change this scenario, making them joint partners to share the responsibility. Before going for JVs, we ensure that 70% of it is commercially viable and 30% socially viable. Making them partners is changing the scenario completely. The great advantage of the move is that it is easy to get local support and clearances, which has been one of the key reasons for delay of railway projects.
What kind of reforms have you introduced in the railways since you took over?
First, delegation of authority. I would like to mention here that in the last one year, not even a single tender has come to me, while it goes to all concerned officers right from GM (general manager) to lower-level officials, so that they are kept in the loop. Second, making all work online. Now most of the work of railways has gone online, be it transfers and postings or tendering process. We have also reduced the tenure for allotting tenders from a year or more to just six months.
As far as railway personnel are concerned, we have come out with the key result areas for each functionary and their (respective) performance is being measured based on it. We have started developing MIS (management information system) for better functioning and soon all accounts would be online to bring transparency, something we promised to the people