commentary
Indian Railways:
Has It Really Reformed?
S Sriraman
A look at the interim budget of the
railways against the backdrop of
the challenges thrown up in the
turnaround of the organisation,
the building of an extensive
network of freight corridors,
and the expansion of commuter
transit services.
S Sriraman (sriraman@economics.mu.ac.in) is
with the Department of Economics, University
of Mumbai.
Economic & Political Weekly  EPW   march 7, 2009  vol xliv no 10
L
ess than a decade back, there was a
widespread feeling that the railways
had entered a declining phase from
which it could be difficult to disentangle
and get back on track once more. The
Rakesh Mohan Committee Report pointed
this out very emphatically with a rider
that things could improve provided cer-
tain hard decisions were made. Obviously,
from a political perspective, such deci-
sions were not easy to take. As a result, the
report and its recommendations appeared
to have been kept in cold storage. No one,
at least in railway circles, talked about it
since then.
Turnaround Strategy
Given the arrival of Lalu Prasad on the
scene of decision-making in 2004, it was
expected that the reforms suggested by
the committee would be buried forever.
The next five years saw the railways min-
ister and his team devise a strategy which
has brought about the (so-called) turn­
around of the railways. Though a certain
(a positive one too) direction has been
given to the working of the railways, it has
not been realised (or rather recognised)
that many of the elements involved in the
process have been very much a part of the
recommendations of studies stretching
from the early 1980s to recent times. In
fact, a new publication penned by a civil
servant, currently the minister’s most
trusted aide, claimed that the entire pro­
cess served the political mandate well,
wherein lay its success. It is easily recog-
nised that good politics is based on good
economics and vice versa, with each
r­einforcing the other. How else can the
emphasis on the railways’ core business of
transportation be interpreted? The interim
railway budget for 2009-10 that was pre-
sented last week reflects the optimism
generated by such a focus, adopted during
the past five years. We look at the interim
budget in terms of the positive features
that have emerged and also the challenges
that have been thrown up in the course
of   the turnaround.
Poor investment decisions or under-­
investments on the part of the railways in
the past have been major constraining
f­actors in improving physical and thereby
financial performance. But equally con-
straining has been the suboptimal use
made of assets that have already been
built up. Rao and Sriraman (1985)
o­bserved this in the context of an attempt
to understand the extent and nature of
disequilibrium prevailing on the Indian
Railways in regard to the provision of
services. For a long time, supply pro­
cedures prevented fuller utilisation of
c­apacity on the system. As a result, the
substantial surpluses required for expan-
sion of facilities and services could not
be   generated. S­riraman (2000; 2002)
pointed this out more emphatically while
trying to examine the revenue implica-
tions of a sub­optimal utilisation of exist-
ing capacity.
Fortunately, during the past decade,
attempts have been made by the railways
to increase asset utilisation as a result of
which the tonnage lifted and thereby the
revenues have gone up substantially, pro-
viding a basis for the expansion of the
a­sset base which is badly required in
c­ertain parts of the system. Some non-
conventional thinking and a strong com-
mitment to follow the road less travelled
has made it possible to exploit the inher-
ent economies of scale that were waiting
to be tapped all these years. And this has
happened both in freight and passenger
movement. All the railway budgets for the
past decade or so (more so after 2004)
have reflected a certain determination to
enable this to happen within the frame-
work of the restructuring process that has
quietly been undertaken during this
period (S­riraman 2007; 2008).
Bulk Movement Business
The organisation has registered an excel-
lent performance in freight loading and
earnings till September 2008, the growth
rate being 10% more than that d­uring the
corresponding period in 2007-08. The for-
mation of a strategic business unit within
the organisation that deals exclusively
with the crucial bulk movement business
is reaping dividends and could soon be
19
commentary

expected to place the railways in a posi- minister rather than any attempt to draw reflected in the widespread dissatisfaction
tion to be able to prevent more diversion some political mileage out of the move. It amongst the travelling public, especially
to the roads if not as an aid to a reversal of would have been wise to confine even this on long distance movements. Mere availa-
some movements to the railways. Though reduction to the lower classes since such bility of tickets through local area booths
some shortfalls (in particular movements) reductions in higher class fares could lead or the internet is hardly the response to
are expected during the rest of 2008-09 to a reduction in revenue given the nature the passengers’ requirements. There has
due to recessionary trends, the overall sit- of demand for trips made in these classes. to be a paradigm shift in effectively pro-
uation is likely to be only m­arginally worse It is obvious now that there is only very viding a host of simple services to the com-
off than expected with reasonable sur- limited competition between the railways mon passenger on trains.
pluses being generated. However, it must and airlines. We have always maintained The budget announced action on a fea-
be recognised that the days of higher that it would be useful to raise passenger sibility study to run bullet trains between
growth rates in freight loading and move- fares at least marginally every year so that Delhi and Patna and such studies would
ment (or even sustaining the current the cross-subsidisation burden on freight also be undertaken for other corridors
movement) may soon be over in the movement decreases, and by offering between major cities. Some preliminary
absence of additional effective capa­city. It competitive rates on freight, the railways work done by various agencies has pro-
is quite possible that the next two years or are able to control, if not stop, the move- vided some estimates. With these high-
so may witness stagnation in freight load- ment towards road transport. But any speed corridors expected to be elevated
ing. Internal sources suggest that the wear increase in passenger fares must be backed ones, the cost per kilometre of the infra-
and tear in facilities is a­lready high and up by an improvement in service quality. structure facility has been estimated to be
pose major safety p­roblems which officials Efforts towards this objective require a far Rs 500 crore. For instance, that would
claim to ignore and even overlook. On the more systematic strategy (even when com- mean an expenditure of the order of
other hand, they proudly record a signifi- pared with the strategy on freight move- Rs  1,00,000 crore for the corridor bet­
cant improvement in safety in terms of the ments) with the necessary elements in ween Mumbai and Pune. While the
declining number of railway accidents place to monitor service levels. Although, response to the proposal has been posi-
during the past five years or so. Recession- railway budgets have continued to empha- tive, it appears that this is so without a
ary trends are useful in such situations sise, year after year, the importance of real under­standing of the implications of
and enable organisations to build this quality of passenger services, efforts in these enormous plans. Zipping through
badly required capacity, especially in this direction have been inadequate as the countryside at 300 kilometres an hour
terms of the line and track capacity.
The budget reflects continuing efforts
that are being made to technologically
upgrade the system in a number of dimen-
sions. Superior types of wagons are being
designed to raise rake capacity by nearly
80%. Modernisation of the network is also
expected to raise sectional capacities by
increasing speeds and permitting higher
loads. The Dedicated Freight Corridors –
on two of which work has already begun
and can be expected to be in place in two
years – could take care of seamless move-
ment of freight in the absence of inter­
ference from passenger movement. How-
ever, apprehensions have been raised
about these corridors relating to viability
of these projects, especially when we take
into account the fact that they may have to
compete with existing corridors on the
Golden Quadrilateral, provided, of course,
the railways limit existing corridors to
passenger movement.

Passenger Services
The across the board decrease in passen-
ger fares to the extent of 2% seems to be
more by way of a parting gift from the
20 march 7, 2009  vol xliv no 10  EPW   Economic & Political Weekly

does seem an attractive and even a
r­omantic proposition. They do it in Japan
and in Europe, some devotees say, why
not in India so as to relieve airport and
highway congestion?
The railways admit that they are not in
a position to fund these projects fully. The
alternative would be a public-private part-
nership (PPP) as has been adopted in the
case of the highways. It is well known that
many of the sections of the Golden Quad-
rilateral of the National Highway system
in India, which have been taken up by the
private sector, are still far from viable and
have required a good deal of funding from
the public exchequer based on additional
cesses and levies. All this has happened
partly because traffic has not materialised
to the extent that was visualised. The
problem has always been that traffic esti-
mates have been exaggerated. This may
be true of daily commuting estimates
which are normally expected to be a
Amita Malik (1921-2009):
Irreverent Dissenter
Sumanta Banerjee
Amita Malik belonged to a small
group of irreverent dissenters
who could dare to defy orthodox
norms and follow their own style
of living and writing.
Sumanta Banerjee (suman5ban@yahoo.com) is
best known for his book In the Wake of
Naxalbari: A History of the Naxalite Movement
in India (1980).
Economic & Political Weekly  EPW   march 7, 2009  vol xliv no 10
s­ubstantial part of the total movement in
the case of bullet trains.
Need to Upgrade
From a social point of view, the railways
are best suited for long distance move-
ment while roads are more effective for
short distances. Given that this has been
established in many studies all over the
world, it would indeed be foolish to under-
take high speed rail services on the pro-
posed short distance corridors. Moreover,
having decided to go in for dedicated
freight corridors in addition to the exist-
ing quadrilateral of the high density rail
corridors it would indeed be difficult for
the railways to provide the alignments
(even on an elevated basis) without really
acquiring space for such developments.
What India needs is upgradation of its
r­ailway system, especially on long dis-
tance routes, which involve crucial move-
ments of different commodities. This may
A
mita Malik, who passed away on
20 February at the age of 88, would
have had a good laugh at being
described as the “doyenne”, “the first lady
of Indian journalism”, in the newspaper
obits! She herself was less generous in
using such laudatory terms for members of
her own profession. In fact, she was feared
(and perhaps also hated) by the present
generation of television anchors for her
acid comments on their inept performance.
A few years ago, in one of her columns she
famously described an NDTV newscaster as
a “drone (who) sounds like a tanpura from
the next room!” She remained a stickler for
the old, well-tested norms of matter-of-fact
journalism and clear articulation, and had
no patience for the slipshod manner of
present-day n­ewfangled television presen-
tations, or news reporting.
Having been trained in those old profes-
sional norms in my early days of journalism
as a Calcutta reporter of The Statesman (not
commentary
require a more network extensive of dedi-
cated freight corridors than the one that
has been proposed. Equally important is
the need to expand the commuter transit
services in the urban areas, besides, of
course, providing for seamless movement
of people on an inter-regional basis. These
responses can be expected to provide solu-
tions to movement problems rather than
bullet trains which may be a romantic
solution in search of a problem.
References
Rao, T V S R and S Sriraman (1985): Disequilibrium in
Rail Freight Services (New Delhi: Ajanta Publica-
tions).
Sriraman, S (2000): “Indian Railway Finances”, Eco-
nomic & Political Weekly, Vol XXXV, No 12, March.
– (2002): “Indian Railway Finances: A C­ritical
Review of Basic Issues and Emerging O­ptions”,
Journal of Indian School of Political Economy,
Vol  X IV, No 3, July-September.
– (2007): “Railways: On Path to Permanent Recov-
ery?”, Economic & Political Weekly, Vol XLII,
No  10, March.
– (2008): “Indian Railways on a Fast Track”, Eco-
nomic & Political Weekly, Vol XLIII, No 11, March.
to be mistaken for its present shabby ver-
sion), I found an immediate rapport with
Amita Malik when I met her for the first
time in 1967 in the corridors of the Delhi
office of our paper soon after my transfer
there. She used to write columns on films
and cultural events for The Statesman at
that time. Being a warm and outgoing per-
sonality, she was quick to discover old con-
nections – my elder brother and sister-­in-
law, who were her friends among many
others (including Samar Sen, Sunil Janah
and the crowd of intrepid Bengali intellec-
tuals of Calcutta who were our heroes at
that time).
I soon began to call her A­mita-di, and
she took me under her wing to introduce
me to her peer group in Delhi who used to
address her as “Amie” – among whom I met
a variety of wonderful personalities. One
of them was Tiny Chatterji (P C Chatterji of
the All India Radio (AIR) fame) who was
to write later a splendidly frank review of
her autobiography – Amita, No Holds
Barred (which also revealed her talent as a
historian of Indian broadcasting). Being
close to her for years, Tiny could claim to
chide her for being “self-­effacing to a fault”
– a charge which might surprise those who
had always thought of her as just the oppo-
site. But a­lthough gregarious in company,
21