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A shining railway Budget 2008 – but at what cost?

February 26, 2008

lalu.jpgAs I watched the railway budget being presented by the Railway Minister Laloo Prasad Yadav today, I tried to control my cynicism. I mean, it is great that the minister has turned around the railways from a loss-making monolith to a profit making one. Corporate sector must be burning with jealousy. Just a taste of the figures:

[1] A Rs 250 billion surplus fund
[2] Gross Traffic Revenues 16 percent higher than the previous year and 2 percent higher than the Budget Estimates!
[3] Operating Ratio likely to improve from the budgeted 79.6 to 76.3 per cent – best in last four decades, it is said, one of the best in the world.
[4] Net Revenue expected at Rs. 18,416 crore -double digit growth in traffic earnings maintained in first nine months, growth in passenger earnings 14 percent, expected growth in goods earnings 14 percent.

But what about consumers? Profits may have climbed from year to year alongwith passenger traffic, but how has it helped consumers? I don’t see any change at the ground level. I travel regularly by Indian Railways and there isn’t any dramatic improvement in the food or general hygiene levels. In fact platforms are filthy and so are the trains in most of the cases. If I come across a clean coach once in a while, I am surprised.

Worse, the railways continue to be tardy when it comes to safety. Guess what, about one percent of monies available are used for safety! And then, the railways use old/outdated equipment, infrastructure and technology. Sure, there are plans to upgrade in the coming year, but this should have been a priority surely. No organisation can afford to neglect it’s customers, but the Indian railways has done so….because it can. It has no competition. It’s a shameless monopoly.

No wonder the profits are so high…there hasn’t been a corresponding increase in consumer comfort and safety standards. Laloo did the job in a way that a corporate honcho would envy, and in a way a corporate honcho might not have been able to get away with.

From Losses to Profits – How was it done?
Laloo Prasad Yadav increased revenue at minimum cost to his company…er…the government-run railways. No wonder the success story of the Indian Railways is now being studied at Harvard and Wharton universities, not to mention the IIM’s in India! Although they too had turned up their noses at the dirt they encountered on the trains. Revenue was increased by various measures like:

  • More coaches introduced
  • More berths per coach
  • Freight carrying capacities of wagons increased
  • New coaches with higher carrying capacities brought in
  • New trains initiated
  • New routes started
  • Many trains converted from ‘express’ to ‘superfast’ enabling an increase in fare
  • Lower class fares kept in check
  • Higher class fares increased

Profits have also been padded by introducing the 90 advance reservation system, a system which had been disbanded…Lalu re-introduced it last year and in the bargain you can guess how much the railways got in it’s coffers all of a sudden! This system causes great inconvenience to passengers, creates an artificial shortage of tickets and increases the hold of touts.

But who cares. Because the consumer has no choice but to go to the Indian Railways. Thank heavans for the low-cost airlines, which I believe are proving to be a nuisance to Laloo.

The railways will continue to lose the higher paying passengers if they don’t pay attention to consumer comfort. All that his profit making measures have given passengers is overcrowding!

The future: A lot has been promised to improve consumer comfort in this year’s budget and we need to take comfort in that…if and when it happens. Here is a short list:

  • To reduce lines at ticket counters, the railways is exploring the option of (1) issuing tickets through mobile phones (2) increasing number of counters and (3) Automatic Ticket Vending Machine counters
  • Overnight mail/express trains to have on-line coach indication display boards to give information about running of the trains and likely time of arrival.
  • Heights of all low and medium level platforms to be increased.
  • Lifts and escalators to be installed at 50 major stations
  • Platforms of 30 stations to be extended for running longer passenger trains
  • Multi-level car parking lots and modernized car parking facilities to be created at 30 major stations.
  • Onboard cleaning to be introduced on all Rajdhani, Shatabdi and Superfast mail and express trains, using modern machines.
  •  36000 coaches to be provided clean toilets by the end of the 11th Plan at a cost of Rs 4000 crore to put a permanent end to the problem of discharge from the train toilets.
  • Ergonomically designed modular toilets with attractive interiors for better hygiene and cleanliness will be introduced.

Another point – Railway infrastructure is ageing and the question is: When will it be refurbished? Is there money for that? Railway bridges across the country are deteriorating by the day, and so are tracks, many of them are a century old. It’s going to cost the railways crores to fix all this…

(Photo of Laloo is from Rediff and the station and train photos are by me)

Other articles on the Indian Railways: Railway plan to improve railways stations
When will the Indian Railways clean up their act?
Profits at the cost of consumers is the mantra of Indian Railways
The 90 day advance reservation system stinks
Online booking of railway tickets doing very well
Broad gauge or Standard gauge for Mumbai Metro?

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38 Comments leave one →
  1. February 26, 2008 10:23 pm

    The Railways Ministry should be disbanded and the entire railways sold off to the private sector. Then we will realise both profits and service. All this self-serving praise and back-patting makes for good copy and brings a sense of satisfaction and nationalistic pride. All of this is false. You are correct in identifying the lack of amenities and safety for the end user, the passenger.
    On top of that, the whole sector reeks of corruption from the bottom up.
    Indian Railways is a great example of what is wrong with the country. The Minister is only a florid stigma of the disease.

  2. February 26, 2008 10:30 pm

    Nita,

    I agree with you.The Railway Minister has done a good job of turning the Railways into a profit-making organisation,no doubt,but there is still a long way to go before we can say that the we are satified with the Railways.

    It is good to see that safety is getting the attention that it deserves-especially with respect to the level crossings and anti-collision devices.

    I agree that one area that needs to be improved massively is passenger amenities-both in the coaches and in the stations.This should be made the next priority after safety.

    Another area that needs to be improved massively is the intra-city trains-local trains,suburban trains and mass rapid transit systems(MRTS).With all the cities getting more and more congested by the day,local train services must be given the attention that thy deserve.

  3. February 26, 2008 10:30 pm

    Rdoc, thanks for those strong words! I agree with every single word of yours. In fact I feel so strongly on this issue that I had cursed the railways in my first draft . Alas, I had to edit my work.

  4. February 26, 2008 10:40 pm

    Raj, all that money is of no use…it’s like the railways are robbing passengers, robbing the common man!

  5. February 26, 2008 10:47 pm

    People who regularly travel by train know how bad the railways are.The condition of railway coaches,railway platforms,railway tracks,beggar menace, pickpocketing, overcrowding, bombblasts,accidents,ticketless travelling and so on. As it is a monopolised government business, railways are not accountable to any one.

  6. February 26, 2008 11:39 pm

    I call BS. I have been travelling at least 7 times a year in Indian trains for the last 6 years on journeys lasting longer than 20 hours. There has been a sea change.

    The service is better.. there are fewer delays.. the food is better by a few orders of magnitude. I can book my tickets online. The last time I was dissatisfied with the catering service, I could get a complain book and file my complain. The catering staff talked to me politely and professionally and were pretty afraid of them being sacked based on my complain which tells me that these complains actually have some effect now. I travel mostly by sleeper and occasionally by 3a or 2a.

    The comment section here is proof positive that the public memory is short. Six years ago I remember doing everything to avoid the railway food and accounting for possible 6 to 12 hour delays while planning my journeys. On my last journey I had some pretty good paneer, dal, rice and chapati for 48 bucks for lunch and some chicken biryani for dinner. It wasn’t particularly great but pretty hygienic and edible. The max a train got late for me on 24 hr+ journeys in the last few years is 4 hours and that too due to Delhi fog. I don’t know what routes you travel by but life is way much better on the Nagpur-X routes for all values of X. The Comseum restaurants at the stations at which they exist are pretty good and pretty much most of the co-travellers I end up randomly meeting in trains agree that service has improved from what it was. It might not be world class awesome yet but it is a huge lot better.

  7. February 26, 2008 11:42 pm

    And privatizing railways would be the worst move ever. Been to a remote village lately? A privatized railway would have no incentive to run a loss making journey or stop there. If you think governments are bad for public good, take a good look at your favourite corporate overlord.

  8. February 26, 2008 11:56 pm

    Anshul:
    What improvements are being mentioned are the contributions of private contractors. If you look at the airline industry, you will realise the fallacy of your arguments.

  9. February 27, 2008 1:51 am

    And outsourcing what can be outsourced to the private sector with due quality assurance is exactly the right thing to do.

    To take your example of flights, there are no direct flights from Nagpur to Chennai. However, there are many many trains in this country that run on non-profitable routes. It is not just for literary elegance that Railways is called the backbone of this country. Privatizing it is a bad idea.

  10. February 27, 2008 1:57 am

    Oh and back when quality was bad, it was still private contractors doing the pantry. It’s a change in Railway’s policy that has brought the difference, I think. I also had my sleeper’s compartment cleaned twice a day on my last sleeper journey by railways employees and not by some beggar. It was a pleasing change. I am sure if I sat and looked through the last six years of my railway journeys I could notice quite a few more. There are armed guards that roam my sleeper compartments these days. That’s one more.

  11. February 27, 2008 4:39 am

    rdoc i dont quite agree the british privatised their rail network and nothing much changed if im not mistaken. If the rail is properly run like a corporate then there can be benefits, cause i think privatisation isnt the best solution – corporatisation and disbanding rail mantralaya and stopping interference from the north and south block is – plus make all ministers or politicians PAY For their bloody tickets and no preferances – tougher to implement though.. plus rails r overstaffed

    the fact that this govt is going back to the times of Indira styled politics – garibi hatao nregs loan waivers for farmers – like the current owner of all psus
    big govt spend going ….guess where –
    the interference by ministers in psu banks and oil cos is also negative

  12. February 27, 2008 7:49 am

    Anshul, thanks for that positive feedback on the Indian Railways. I think you are indeed lucky to have such experiences, or maybe my expectations are too high. But I must tell you that there was some talking to people on live TV yesterday and a lot of people were cursing the Indian Railways. I think a lot of people have bad experiences. Just recently (December) I went to Ahmedabad from Mumbai and our second AC compartment had several cockroaches and the sheets given were yellowish and the pillowcase was smelling. The toilet was not clean.
    I have been traveling by train since my childhood and I find that the prices have gone up, but food/service/quality is horrible as compared to it. Anyday I prefer to buy a vada pav from a vendor than eat railways food and get a stomach ache. But then, everyone has different experiences. I too book my tickets online, and that is the only good thing that has happened to IR. Overall, IR stinks according to me..I mean in terms of consumer comfort. I still sidestep shit when I walk on platforms and there are still shady people who live on the platforms. There is shit on the tracks, and more of it than ever. More plastic and more muck.
    I too believe that privatisation would improve the railways, but then it’s wishful thinking! In any case even a private carrier can have some conditions about routes.
    Prax, if the railways are run properly by the govt. why, that will be great too! But that is wishful thinking too isn’t it!

  13. Rajesh permalink
    February 27, 2008 8:03 am

    Nita

    When Lalu proclaims himself as ” Railway Man” , the real railway man to be mentioned is Sreedharan who was behind Delhi metro’s success.We need people like him to manage IndianRailways so that the common man can think of having a better service.

  14. February 27, 2008 9:54 am

    Nita, Did you on that journey to fill the railway complaint book?

    Guilty as charged Anshul. No, all I did was grumble to the guard in the train and demand that he give me better sheets. Also I complained to the man verbally about the cockroaches, that’s all. But you know there were other people in the compartment who told me…forget it! this is normal and those are tiny cockroaches!🙂 They sort of made me feel as if I was making too much fuss. Generally I thought they had a complacent attitude.- Nita.

  15. Vivek Khadpekar permalink
    February 27, 2008 10:56 am

    Nita,

    I welcome your scepticism. And people who know about these things tell me that the big railway turnaround claimed by Lalu during his tenure is a big sham, perpetrated in collusion with his in-house number crunchers and endorsed by self-serving academics of supposedly impeccable reputation. Of course I am not competent to either agree or disagree with the cynics. But I always tend to endorse healthy irreverence.

  16. Vivek Khadpekar permalink
    February 27, 2008 11:04 am

    Rajesh,

    I am slightly disturbed when I hear hosannahs sung to Sreedharan (or Abdul Kalam). They are very competent technocrats and, presumably, men of great integrity. Both qualities are to be greatly admired.

    But let us not imbue them with more than their proven worth. Thereby we risk wandering into the realm of fantasy which could lead us to the justifying some arguably undemocratic methods in practising an “ends-justify-the-means” philosophy.

  17. February 27, 2008 12:33 pm

    In the future, just ask for the complaint book with the TT and watch the fresh sheets come through. In case the TT or the conductors refuse you, keep your ticket and file a complaint through irctc.com using your pnr. It is illegal for a TT to refuse your complain and they can trace the TT that did that through your pnr. Railways policies have changed but they won’t get enforced till we passengers stand for our rights.

    Also, I am not saying that things are great or anything… It’s actually quite bad still (I have had my share of roaches) but those who claim that it hasn’t improved have just lost perspective.

    Anshul, everything is is relative. If you compare the hype that is being generated by the budget, the tom-tomming of the profits and the surplus, the case-study going to Wharton etc, I think the improvements are nothing that make an impact. Most of the money is going into the coffers, little is being done for the consumer. Frankly, I am a demanding consumer, and it’s not just about the railways. When I pay for something, I expect something. If I have to complain and make an issue of it then it means that I have not got my money’s worth. The Railways are not keeping up the customer service if one just takes into account the hype. In fact if read my post again you will see that this is what I have written:

    I don’t see any change at the ground level. I travel regularly by Indian Railways and there isn’t any dramatic improvement in the food or general hygiene levels.

    The second sentence is a kind of explanation of the first…

    – Nita.

  18. February 27, 2008 12:58 pm

    nita i didnt mean managed by the govt
    i meant a listed company – with independent directors in which govt has a stake – where govt subsidizes certain routes but does so with some amt of clarity and transparency

    ps rajesh pointed out right Sreedharan is a real good man in terms of implimentation – konkan rail is a world marvel

    but delhi metro is a waste of taxpayers money like the kolkata metro they subsidise per person close to rs35000

  19. February 27, 2008 1:13 pm

    I have an anecdote to share. It may appear to be OT, but by the end of it, I hope its relevance will be noticed.

    Someone I know, a paper consultant, is a consultant for the Tamil Nadu govt. initiated TNPL. I once commented on how TNPL was consistently growing, generating profits, speaking of the commendable work by the government, when he added, “for a government”. He added, “TNPL would be generating much larger profits if it were private owned, since the bosses are IAS officers, bureaucrats that have no knowledge of the paper industry.”

    He is also a consultant for the ITC Bhadrachalam paper plant.

    @Prax: Sure, privatizing isn’t going to guarantee a smooth running of public services like transportation. But is it so hard to start off a pilot project to see if it is viable, if our “multinationals” are capable of not just running these services, but running them profitably, while increasing the value of the service? But then that would mean that much less to line to pockets of our promiscuous, football team producing politicians.

  20. February 27, 2008 1:24 pm

    true dd,
    railways can never be privatised – it is overstaffed and highly unionised and ready to strike at the drop of a hairpin not even a hat – if done it would be worse than delhi e/c distribtn pvtsn

    but u must also remember that the same bureaucrats that served ongc gail hp bp were picked up by mittal and look how big mittal steel has now become… given time and proper education – everyone can reach their potential and in a corporatised entity pvt competent managers can always find a place

  21. February 27, 2008 2:05 pm

    @Prax: I did not say that people in the government services are incapable. Though, I am pretty sure Mittal Steel took with it the technical personnel or business management professionals rather than politicians… just like the person I mentioned! Our government owned companies will PROBABLY be a lot more efficient with just a change in top management and policy makers. The work force, is probably more than capable of the task and a large part of their skills is probably weighed down by the bullshit they have to deal with…

  22. February 27, 2008 8:37 pm

    come on.. give it to the guy, he has done something unlike other who is siting on their a**.. although you are correct in saying but i can argue he has done improvements in revenue with making anything worst then before. lets face it all your points holds good before and it carry forward. may be it wasn’t in priority so far and will get attention in future may be. atleast lets hope that.

  23. February 27, 2008 10:38 pm

    Prax, so you mean part public and part private. Well, that is a good suggestion, but our govt. will never let go. I don’t think they trust any company enough!

    DD, yeah it’s the govt system here which causes problems. We have good people…

    Yuva, ofcourse…but main thing is to keep things in perspective! Not get carried away! And I am with you…let’s hope that things will improve. If the railways is a govt. co., they need to think of public service.

  24. raju permalink
    February 27, 2008 11:56 pm

    Excellent article!!!

  25. February 28, 2008 12:08 am

    dd , shubir raha was an excellent man and he changed ongc ..the then minister mani shankar aiyar made sure he was shown the door
    look at ongc and look at reliance ongc ipo of 712.5 is now at 1100 while reliance has given more than 10 times to its shareholdrs

    dd ps dont think all bureaucrats r idiots or incapable – the problem is honest competent people are never let to govern psus – i call them political slave units cause there is heavy political interference from the minister wanting to refurbish his house at psu expense to his interference in giving jobs or taking decisions for company and shareholder benifit

  26. February 28, 2008 12:10 am

    nita i meant corporatised – not under govt control or interference
    but governed by an independent and competent management team which goes about working with transparency

  27. vivchavan permalink
    February 28, 2008 10:42 am

    i am totally disagree with Privatisation.
    Overall railway is in huge profit.
    in a world there is no system taht is 100 % sufficient.
    every successful system has some disadvantages, some bad things.
    i agree with opinoins of peoples that food is not hygenic, station conditions are not good, toilets are not good. but u are forgetting that 4 years back nothing was in rhythm. railway is very big system it is not possible to improve everything overnight. whatever Railway achieved in last 4 years is just amazing, even not achieved by any private sector.
    Privatization: I think privatization is curse in public systems,
    how may of you happy with Services provided mobile service providers, Electricity board, or any kind of service that is private and that is for peoples, they only look for profit.
    We have to wait for few more years (3/4) to see the railway with every facility.
    as it is service for people, peoples need to contribute, need to dustbins, need to flush properly, need to follow rules.

    Well, I do hope the railways provide the service they have promised. But in my opinion, the mobile service providers, pvt. electricity services provide far better service than the railways and railways are looking only to profit, not service. Well, that’s because they have no competition. Most of railways’ achievements have been in the region of profits, except for the electronic booking. However, I have an open mind and am willing to be convinced if you will tell me of any other significant change – Nita.

  28. February 28, 2008 11:14 am

    Okay, I would agree with the fact that there are lot of improvements that we really need, but… why do you just look @ things with colored glass ?🙂

    You must admit the fact that Indian Railways, is such a huge establishment, and it will take more time to get things improved on the ground level..

    Crimes need to be controlled or cut down to zero, need more clean stations, tracks, etc etc… yes, but nobody cared about it for more than 60 years.. and now at least something is happening….

    Again, I agree that profit and numbers are just nothing if it in turn, is not useful for the normal passengers.. but you need money to improve things @ the ground level, which a loss making huge esblishment like Railways never had,.. now u have a point to insist on, and ask for🙂

  29. February 28, 2008 12:55 pm

    Dinsan, Until I wrote this post, I had no idea that the Indian Railways had so many fans!🙂 As long as it is not a feeling of being patriotic it’s okay! you say that you need money to improve things at the ground level..but that is what I am saying! Lalu has been collecting the money for some time now and I want to see some improvements otherwise I will not respect his so-called profits! But I don’t agree when you say that nobody cared about improving the railways earlier.
    The greatest dramatic improvement I remember is when second class railway seats were replaced with berths consisting of two inches foam instead of the previous wooden. Link here.
    This was when the railways was going into a loss! True public service I would say!
    on the other hadn we have the railways making profits now for some years, right from 2005, but the results on the ground are pathetic.

  30. February 28, 2008 4:19 pm

    @Vivchavan: I am not sure if your comment has already been addressed. The ISP’s, telecom companies, Electric companies are HEAVILY regulated by the government. Some are governed by arcane as well as archaic regulations, such that even if the companies interests paralleled the interest of the public, it would be unable to provide the services we required.

    Thanks DD for mentioning this. Just forgot to point it out! You are absolutely correct, we don’t have true privatisation of these companies. – Nita.

  31. February 28, 2008 4:25 pm

    The link Nita posted has got me thinking. I was wondering if someone can furnish statistics for the Konkan railway project.

    I have travelled just once along the KR route, by the Matsyagandha Express (I believe that was what it was called), from Bombay to Goa. My experience was quite satisfying. The coaches were new, so it would be unfair to comment on their comfort, but the service was brilliant, the food was beyond what I expected. All the food was fresh (unlike the normal railway fare) and there was someone who would clean the floors etc periodicallly. Not to mention the scenic stations. They were an absolute joy! That again can be put down to the fact that they were new, and lacking heavy traffic.

    If anyone has recently travelled along the route, what have your experiences been?

    DD, I have not traveled along this route but I am not at all surprised by your experience. The best memories I have of train journeys were ten years ago! – Nita.

  32. February 28, 2008 6:52 pm

    To me there have been improvements
    1. Now the trains reach on time ( read : railway time = lesser delays)
    2. Online booking and online information is of great help (although there are problems)
    3. Touch screens at railway stations. (Now u don’t have to crowd at the ‘May I help you’ who at many stations do not respond to your queries at all)

    And I agree with you that we need better hygiene and safety in the compartments as well as at platforms.
    I guess it will get better gradually (being highly optimistic).

  33. February 28, 2008 6:53 pm

    and……good post Nita.🙂

  34. vivchavan permalink
    February 28, 2008 7:33 pm

    That’s really good that people coming here are having the good knowledge.
    actually i wanted to tell some stories of service providers but lack of time i could not.
    anyways.. we are in make over phase, so hope for good,.. best.
    vivchavan.blogspot.com
    vivchavan.wordpress.com

  35. March 1, 2008 12:49 pm

    @ Nita,

    Lalu has been collecting the money for some time now and I want to see some

    you should get answer if another party comes to power in the next election.. lets start thinking about how to name it… fodder scam like railway scam ?😉

    well, that was half joke… but it is a possibility ..

    I have been thinking of this too…I wouldn’t be at all surprised if it turns out that money has been made, knowing Lalu’s past history! There is a possibility that his corrupt ways are behind him..but well, I doubt it. – Nita.

  36. Sandeep permalink
    March 1, 2008 3:29 pm

    Nita’s observation are perfect.
    Now rly is thinking of increasing one more seat between side upper and side lower thus increasing the revenue to the tune of 12%. There is no clarity where the person will seat when not sleeping????

    I have travelled so many time but never seen the coaches(only toilets) cleaned during journey + 20+ hours by railways. They get cleaned by beggers.

    The 90 days advance and 30 days limit for cancelling a unused ticket even after the train departure is a revenue earning device. Jsut imagine interest earnned for additional 30 days booked in advance. More train connecting to patna and thus giving a chance to Raj Thakrey to voice his issues

  37. Sandeep permalink
    March 1, 2008 3:32 pm

    today there wasa news that Lalu wants to induct his son in the cricket team-under 19 WC
    Beware Sharad Pawar- Lalu expected to Join u in BCCI also and shift the headquarter of BCCI to Patna

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