Forget Wi-Fi and bullet trains, what the Indian Railways needs is proper accounting reform and organisational restructuring. Sadly, this railway minister has proved as reluctant to push these as all his predecessors.
Every year, the railway budget is made, more or less, in the following way: the minister for railways tells the Railway Board members: “We have to increase the outlay… The railways must expand, look, smell and feel ‘new’ and, of course, there must be no increase in passenger fares, elections are approaching. Our government is committed to modernization and expansion of the railways but we cannot tolerate corruption.”
It is evident the rail budget for 2016-17 was prepared by the board accordingly.
Amidst comparatively little hype and hoopla, it was presented this morning by rail minister Suresh Prabhu. Some amount of creative accounting to make ends appear to be meeting is a matter of routine with the experts in board. Therefore the numbers should be taken with a pinch of salt. A massive investment of Rs 1.2 lakh crore is promised. How? Where is the money coming from? The LIC has been roped in to finance the Indian Railways, and that is a very serious matter since LIC offers sovereign guarantees to its customers and cannot afford to fail, or have an NPA on its books. Just recently, the railways had to create a fund to service the freight corridor’s debts. There are other debts piling up and now we are adding more and more yet playing to populism by not raising freight rates and passenger fares. To be sure, when this budget was cobbled up there was much toil, sweat, shouting, swearing and perhaps last minute shafting by babus as well as businesses – by someone (department/industry) who could access the MR in the last minute. However, I imagine no blood was spilt. Populism carried everyone. The budget has no revolutionary idea behind it that could draw blood.
We thus have a typical babu’s budget, except the numbers do indeed look prettier – especially in view of the previous government’s benign neglect of the railways. There is, however, no new idea in the railway budget this year – just as there hasn’t been one in previous umpteen railway budgets. Only the figures have changed, and hugely this time. There is proforma mention of it but no real ‘accounting reforms’ have been attempted – reforms that would have made a dent on corruption, upped the efficiency on account of real time monitoring, cut out waste – of which there is plenty known and plenty more unknown. The organisational ‘re-structuring’ of the railway cadres finds a mention too (‘navnirman’) but like the elusive accounting reforms, restructuring too seems platitudinous.
Victim of status quoists
Together, these two reforms can take the railways to the next orbit. They would automatically make for quick decision-making, ending departmental divisiveness and enthusing railway staffers who are not status quoists but honest and hard-working. Those who are for the status quo are the corrupt, the lazy and the sycophantic. Contrary to appearance, they are few but very vocal and powerful. Then there is also the idea of an independent ‘regulatory’ authority to fix fares and freight structures, freeing them of politics, and shedding off non-core activities which have been ritually mentioned.
These kinds of simple ideas have been around for longer than I have been in the railways, which is about 40 years. Report after report has mentioned them and many more good ideas besides, but I put a premium on accounting reforms and restructuring – the two ideas which have become victims of the status quo loving babus. The enormous investments slated for the railways in this budget and all the five years of this government (Rs 8.5 lakh crores) would be wasted if decision-making is uninformed real time, diffused, layered and labyrinthine, and if its monitoring and control is as loose as it is today.
The short point is you have a fine organisation, well-laid systems of operations and the best technically qualified people but discipline has become loose owing to socio-economic developments and political polarisation. This is as true of the railways as of any other public enterprise.
Information Technology in businesses was first developed for accounting applications to keep close watch of the money as it came and went real time. Take your eyes off the money momentarily and you have lost control of the business. This is true of any large, complex organisation. Indian Railways is large and complex and it has no system that allows management – and thus the public (through auditors) – to keep hourly real-time watch on the accounting. Nor on the physical measure of service it has delivered in the transportation of goods and passengers etc. Its reports in all these areas are still manually compiled and can, and therefore are, fudged.
In the railways, the manual collection of data, was a regular and systematic workaday feature. Systems of collection and recording started to fold-up circa 1947 and by the late 1970s, when I joined the organisation, I saw some of them here, some there, wherever, whoever saved it for the time. Most of those systems have been destroyed since the effort involved was too much and in free India who could dare to enforce them except on a small dwindling tribe. Thus was IT introduced in the railways in a small way. However, IT systems are not allowed for accounting reforms because of the unfounded fear of loss of jobs. Actually, there are vested interests that would become exposed and perhaps called to account.
This government was deemed to be against corruption. Indian Railways could have taken these two ideas, for they are doable and can show results in savings – cutting waste and improving efficiency that the public can feel. The current rail minister could have scored hugely for his government – which is suddenly seen to be fast loosing its sheen. He is thought to be one of the few cerebral individuals in a government that has quite a few anti-intellectuals on board. Bullet trains, passenger facilities, wi-fi enabled stations, mobile booking facilities are all cosmetic. The real Suresh Prabhu must show up without further delay. For what I have said does not even cover the graver long-term problem, namely planning for 30 years ahead – without which the Indian Railways can never be top class internationally.
C S Rao is a former Director Finance/ Centre for Railway Information Systems (CRIS)