PROBLEMS OF INDIAN RAILWAYS
Problems of Indian Railways:
Although Indian Railways have progressed a lot, both quantitatively and qualitatively, during the last few years, this system is still plagued by a number of problems which require immediate attention.
- Indian Railways have been in the news albeit for wrong reasons. With the rapid increase in passenger and goods traffic, the frequency of train accidents is increasing very fast.
- This has raised serious doubts in the public mind about safety of Rail travel and the general health of the railway network.
- There are several factors which are responsible for increasing number of railway accidents; some outstanding being over aged tracks, wagons, coaches, bridges and signaling system. According to the Khanna Railways Safety Review Committee Report, nearly 25 per cent of the total railway track in India is over aged and is due for replacement.
Recently the Railway Minister has suggested that Railways will launch a zero-accident mission envisaging :
- renewal of tracks,
- more railway bridges,
- better signalling and;
- rolling out of accident-proof coaches and engines,
- Once we implement it fully, the accident rate will go down and speeds will improve, facilities will improve, quality of service will go up and revenue will increase. Customer experience will go up significantly.
- The plan has come amid an increase in number of railway accidents in recent months. Train accidents, delay of trains and deterioration of service, which is seen today, all are happening because of the underinvestment in the past. The ‘zero-accident mission’ is an expensive proposition, but it is worth giving a shot.
- With this objective in mind, the Ministry has planned an investment of Rs 8.5 lakh crore in the next five years. Explaining how the additional funds will be raised, Mr. Prabhu said all investments could not come from fares or freight.
- “We will do prudential borrowing from institutions such as the LIC, the World Bank and other multilateral agencies, which would be repaid in the next 30-40 years through an increase in revenues,” Railway Minister has said.
- The Minister said he was working on increasing the transparency and efficiency of the Railways by bringing in a change in the accounting system, which was key to attracting investments.
- Cost and Revenue Problems:
- As is the case with most of the government organisations, Indian Railways face chronic financial crisis.
- The annual rate of increase in cost has overtaken that of revenues during the last few years. A study of Railways finances from 1998 to 2004 reveals that the revenues increased at an average annual rate of 8.7 per cent against the 9.65 per cent average annual growth in costs. Following are the main causes of costs and revenue problems.
Low level of employee productivity:
- The organisation has been reducing its workforce since 1992-93 by a paltry one per cent annually.
- An estimated 30 per cent surplus workforce and operation of a number of lines with low traffic and assets not essential for the Railways are contributory factors.
- Transport output in terms of passengers and freight tonne kilometres per employee on Indian Railways is only 400 as compared to 500 for Chinese and 570 for French Railways.
- Indian Railways face a serious problem of low level of employee productivity.
- With the implementation of the recommendations of the Pay Commission, staff wages have increased tremendously and have put heavy strain on the financial resources of the Railways.
- Increase in lease charges:
- Paucity of funds forces the, Indian Railways to resort to market borrowings which results in increased lease charges.
- Market borrowings started in 1986 and the trend is increasing. At present payout of lease charges constitute about 8.5 per cent of the revenue.
4. Slowdown in Revenue Growth:
- With saturation of trunk routes and low quality of services and reliability, the revenue growth has registered a slowdown.
- The railways are increasingly becoming a transporter of bulk commodities for public sector (coal, iron ore, food-grains, etc.) and are consistently losing to roadways. Most of the national highways run parallel to railways and are consistently snatching revenues from the railways
5. Social Burden:
- Indian Railways have to play a dual role of revenue earning as well as meeting the social obligations.
- The Expert Group, constituted in December 1998 to study the railway sector, termed it as the ‘split personality’.
- On one hand, the Railways are seen as a commercial organisation and on the other hand, it is treated as a social organisation which must perform its social obligations.
- The two functions are diametrically opposite and difficult to reconcile. There are several social obligations on the railways which are always running below cost.
Suburban passenger services, concessionary travel to certain section of travelers, concessional freight movement of certain commodities, particularly to remote and inaccessible areas like the North-east region, providing rail services to backward regions are some of the outstanding social obligations on the Indian Railways.