Monday, 30th October 2017

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Three pillars of success

To "reorganise, restructure and rejuvenate" Indian Railways, minister Suresh Prabhu today announced several measures that hinge on three pillars - efficiency improvement, new revenue sources and revamped decision making.

  • Published 26.02.16
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To "reorganise, restructure and rejuvenate" Indian Railways, minister Suresh Prabhu today announced several measures that hinge on three pillars - efficiency improvement, new revenue sources and revamped decision making.

While plans to increase capital expenditure are welcome, the railways will need to tap non-traditional sources of funding such as financing from international markets and multi-lateral and bilateral agencies. Joint ventures with state governments to implement projects in the PPP mode are steps for the medium- and long-term, but is unlikely to resolve short-term financing needs.

Prabhu has sought to initiate the transformation of the railways into a customer-oriented organisation through enhanced technology use and innovation. Steps such as revamping the governance mechanisms within the railways and the adoption of an internal audit mechanism aim at kick-starting this transformation.

There is a renewed focus on enhancing the modal share of freight through the introduction of pilot time-tabled freight container, parcels and special commodity trains, enhanced terminal capacity through rail side logistics parks and warehousing, expanding freight basket and opening up of the container sector to all traffic barring few commodities.

Using social media, introducing modern refurbished coaches, 100 stations with Wi-Fi, bar coded tickets, improved safety and security are likely to lead to higher customer satisfaction.

Cost reduction will be key to Prabhu's target of keeping the target operating ratio at 92 per cent for 2016-17. This coupled with cost recovery through tariff and non-tariff measures and proposed reductions in diesel and electricity consumption can prove helpful in the short-term.

Prabhu has delivered a fairly balanced budget that aims to put the Indian Railways on the journey of becoming a more customer focused organisation.

• Bhattacharya is partner, infrastructure and government services, KPMG in India