#dnaEdit: Restructuring now

Going by the experience of the Indian railways, the sun, unfortunately, sinks in the east. But now it seems to be tentatively rising in the south. During the last decade and more of their stewardship, successive railway ministers from the east, have casually discarded the core interests of nurturing the railway system. Instead, they have played to the gallery. Ram Vilas Paswan, Lalu Yadav, Nitish Kumar and, last but not least, Mamata Banerjee have persistently sapped the railways dry in promoting sectarian interests. The upshot of their adventurism has been well-described by Sadananda Gowda, the first railway minister of the Modi government, in his maiden budget speech. The litany of woes reads like a planned attempt to bring one of the world’s largest rail networks to its knees: preoccupation with sanctioning projects, complete disregard of operational efficiency and financial viability. Consider the fact that in the last 30 years 676 projects were sanctioned by these venerable ministers, involving investment of Rs1,57,883 crore, of which only 317 were completed.  Four of these are as old as 30 years. The ministers had imposed such investment obligations, when their policy of no freight and fare hike had reduced railway finances to such a state that out of its earning of every Re1, expenses were 94 paise. 

It must be said that the current railway minister is a brave man. In the face of such dire financial straits, he has gathered the courage to rejuvenate finances. His move of detaching tariff hike from the budget presentation makes for good strategy. Tariff is an operational decision; he has made his budget into a policy instrument. In pursuit of that strategy, he has adopted a corporate-like approach: he is doing something akin to zero-based budgeting: he has no new projects. He is prioritising and setting time-lines for project completion. He is proposing to mobilise resources through three main avenues, including allowing FDI in railways. 

But fire-fighting apart, Gowda has given hints of his ambitious renewal project.  First, he has announced a railways’ counterpart of  Vajpayee’s “Golden Quadrilateral”. To give his Prime Minister that lasting fame that Vajpayee now claims, Gowda proposes to build a Diamond Quadrilateral of  high speed rail linkage connecting the metropolises and some other centres. Secondly, he has mentioned in passing his intention of introducing structural reforms of the Railway Board, segregating its role in policy formulation from implementation. That could be critical for the future of India’s railway system.

The restructuring should be hugely ambitious. And there is a model for that already. The railways are currently a department of Government of India. It should be separated and reorganised along the lines of the Oil and Natural Gas Commission. Once it is no longer part of the Government  of India, it could in stages be converted into a full-fledged company.  It will be freed of its shackles and realise its full value just as ONGC Ltd now commands for its shares on the bourses. Is that too-preposterous a dream? Perhaps. But then, that could well be  Narendra Modi’s lasting fame.