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This article was first published 6 years ago  » Business » To make Indian Railways work like a corporate

To make Indian Railways work like a corporate

By Shine Jacob and Jyoti Mukul
May 29, 2017 08:35 IST
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'You can never bring about a change if you only bring in outsiders. Consultants will never feel what changes are necessary and where.'
Railway Minister Suresh Prabhu talks restructuring plans with Shine Jacob and Jyoti Mukul.

Suresh Prabhu Indian Railways

Illustration: UttamGhosh/

Indian Railways has been going through a transformational phase, with the merger of Budgets, introduction of high-speed trains and delegation of powers. Railway Minister Suresh Prabhu talks about its restructuring plans and corporatisation dreams in this interview.

The Bibek Debroy committee had recommended an overhaul of the railway's organisation structure. How do you plan to take this forward?

First, we should understand why restructuring is necessary.

Now, we have a clear corporate goal. If you have a corporate goal and the organisation is not aligned with it, a re-organisation is necessary. Everybody has agreed to the corporate goals we have lined up.

Now, we are finding out areas where our corporate goals and organisation goals don't go hand-in-hand. We have made some changes already. For example, now there is a member (traction) and member (rolling stocks), which includes both mechanical and electrical.

We are also thinking about giving powers where the action is. So, we started with zones. If you want to get more market share and understand what people want, more powers should be with divisions, not even with zones.

Our next aim is to do that and invest them with all authority to take decisions. If you want to negotiate with customers and attract more traffic, they must have the power to do that.

Zones will play a less important role than they do today. It will be a decentralised head office here, much like a corporate office.

What will be the nature of functioning at the headquarters?

The corporate office functions include corporate planning; very strong internal audit based on strong internal controls; finance, as we will be raising money regularly; human resources, as we cannot have HR given to outside agencies; and technology. These are the essential functions that need to be done at the head office.

Otherwise, we should really think about giving more and more powers to the divisions.

To think about re-organisation in a more focused way, we have set up a transformation cell. This was formed after the recent Rail Vikas Shivir we organised, where ideas of employees were welcomed.

People who are working in this cell are relatively younger. The important factor is that they are from the railways. You can never bring about a change if you only bring in outsiders. Consultants will never feel what changes are necessary and where.

The best doctor is the patient himself because he understands where the pain originates.

How do you see the railways after the setting up of the Railway Development Authority?

The Cabinet has already approved the regulator. We have immediately taken up the matter with the Department of Personnel and Training (DoPT).

As soon as the posts are approved and created by DoPT, we will go ahead with it.

The authority will be completely independent; appointments would be done by a search committee. It will be similar to what we did in the power ministry when the Central Electricity Regulatory Commission was set up. We will invest a lot of powers with this body.

What will be the change you foresee in the functioning of the railways a year down the line?

In the fourth year, the railways must be more decentralised, with a regulator in place. The railways cannot work from the Railway Board. We are an over-centralised organisation.

Certain functions cannot be decentralised -- HR, finance and corporate audit. There are functions that can easily be delegated and can be discharged more efficiently, like train operations, freight and getting more customers. These can be done at the division level.

There is a huge hierarchy we have created, which is hampering the efficiency of our operations. We will enhance the Railway Board's capabilities into working on a broader vision for the railways and putting a proper system in place.

On tariff, the changes will be made by the regulator. We will give them power and authority. The changes will happen over a period of time.

There have been concerns from the consumer side about punctuality and safety. How are you addressing these?

These are two sides of the same coin. If you don't maintain assets, safety will be compromised. But, punctuality suffers because we have to block lines.

Can you do maintenance without blocking? That is exactly what has happened since we have started work on doubling. When doubling work is on and there is a track on the other side, we have to block traffic. So, all of these expansion works affect traffic.

People have to understand that punctuality is being affected because of expansion and electrification work. We are trying to finish the first phase of expansion by 2020.

What is the status of listing of railway public sector undertakings? Won't the service charge waiver impact Indian Railway Catering and Tourism Corporation (IRCTC) valuation?

We are aware of the IRCTC service charge issue (because of the post-demonetisation waiver). We have taken it up with the Ministry of Finance.

There is a silver lining. IRCTC should concentrate on catering and tourism, the purpose for which it was set up.

Have railway freight initiatives helped? Isn't the subdued economic pick-up a worry?

We have loaded 4 million tonnes more than the target in April; even in May, the loading will 2-3 million tonnes more.

The railways has specialised in bulk transport, but we need to move towards piecemeal cargo and contanerisation. One way is through double stack container trains that can run even on electrified traction. There will be big opportunity for aggregators here.

Has project execution improved and have the Life Insurance Corporation (LIC) funds been put to use?

Powers have been delegated to zones for better execution.

Projects worth ₹1.5 lakh crore have been identified for execution through LIC funding. Of this, ₹22,000 crore worth of funding has already been used.

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Shine Jacob and Jyoti Mukul
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