New Delhi, Nov. 12: Indian Railways will soon formulate an eight-year reform plan that is designed to slash costs and rationalise freight and fare structures.
“An internal study on cost reduction has already been completed. We are monitoring every unit of cost and profit for each department,” Railway board chairman I. I. M. S. Rana told reporters on the sidelines of the national conference on logistics by railways, organised by the Confederation of Indian Industry (CII).
Speaking on the occasion, minister of state for railways Bandaru Dattatraya reiterated that the Railways would take a fresh look at the recommendations made by the Rakesh Mohan committee to revamp it.
The committee had recommended privatisation of parts of the Railways—a recommendation that has been greeted with hostility within the Railways.
“A large organisation like the railways cannot be privatised. But we look forward to a public-private partnership in our programme,” Dattatraya said.
“We in the ministry are conscious of the fact that the Railways’ share in the overall transportation of goods and passenger traffic has been falling. There is a need to review strategies and policies not only to retain the bulk cargo but more importantly to attract low-volume high-value commodities”.
“At present, the Railways account for 40 per cent of the total freight traffic. We aim to raise it to 50 per cent within the next 10 years,” Dattatraya said.
The key steps taken to fulfil the target includes rationalisation of classes for different commodities from 59 to 32 categories, delegation of powers to zonal and divisional railways to sharpen interface with customers, and introduction of high-speed refrigerated parcel vans to move perishables.
Stressing the need to expedite decision making, Dattatraya felt that decisions regarding formation of RailTel and Indian Railway Catering and Tourism Corporation should have been taken long ago. He added that “by laying optic fibre cables along the 63,000 km route network, the Indian Railways is poised to earn Rs 3,000 crore annually”.
Dattatraya explained that budgetary support for the Railways has declined over the years. Adding to the problem is the “socio-centric” duty of the Railways which makes it suffer due to its “social obligations”.
The obligations are primarily on account of subsidies provided to certain passenger segments, carrying essential commodities below cost and investing in numerous projects that do not provide adequate returns. These, however, remain essential in the light of social development and connectivity.
“The government has, therefore, almost doubled the Plan allocation to Rs 27,600 crore for the Tenth Plan from Rs 15,200 crore in the Eighth Plan period,” he said.
The ministry has undertaken a 10-year manpower planning programme which envisages limiting staff cost to approximately 35 per cent of the gross traffic receipts within the next 10 years. “The operating ratio which has come down to 96.6 per cent last year is expected to be brought down further to 94.4 per cent this year,” Dattatraya said.