Railway minister Pavan Kumar Bansal presents the railway budget for 2013-14 on Tuesday. Can the common man expect any real relief? The track record of the railways in general and of Bansal in particular does not inspire much hope. Here is what our expert columnist wrote for our the February 1-15 issue after Bansal revised the fares ahead of the budget.

As I read through the news on the railway fare hike, I am reminded of an anecdote. Its authenticity aside, the message should not be lost. In Ulhasnagar, a suburb on the outskirts of Mumbai, a small group of daily commuters thought of an innovative way to travel cheaper and in the process developed some sort of a community fund. It was decided that whoever, as a commuter, joined this group would pay a small monthly premium. This is what the premium did: you could buy a second-class ticket and travel first class.

But in case you were accosted by a ticket conductor, you could pay the fine, come back to the group, show your receipt and claim the full penalty amount. And the group, after paying for all fines, did take home some money every month from this cottage ‘insurance’ industry!

The story speaks volumes about how wonderfully leaky the Indian Railways system is — especially the poor ticket administration. Coming back to reality, yes the railway system does need reform, but the definition of reform is the debate — especially whether passenger pricing should bear all that brunt of the ‘reform’.

Railway minister Pawan Kumar Bansal represents a national party and therefore had to betray a sense of commitment to reform, or what it is perceived to be. Reforms, as all pink papers and pink ideologues (no other ‘pink’ pun intended) tell us, is the act of telling a supposedly pampered lower-middle class and middle class that enough is enough; that there are no more free lunches.

Why, just last week the railways even hiked the price of food sold on trains. The price of former railway minister Lalu Prasad’s favourtie poori-sabzi went up 100 percent — from a measly Rs 10. Why not? Even the railway ministry had to do its bit for the ‘dharma of a collective cabinet’ by contributing to food inflation, why leave the FM alone? After all, the railway portfolio had returned had returned to a national party after a gap of 16 years! So responsible they had to be.

Then came the holy grail — passenger tariff. Much like the fabled emperor who walked naked and had the gallery applaud him for his gown, the governing elite get praised for their ‘reforms’ without any debate on what constitutes reform, with virtually no dissenters in the ring. Yours truly now wants to dissent.

The aam admi perspective

I consider myself aam — not because of any fetish for any specific fruit but because I don’t pay touts to book my tickets, I used to book them lawfully over the counter and now do it through the IRCTC website. And, yes, I still often travel sleeper class; or should I say cattle class?

Over the last decade, Indian Railways has increased passenger tariff surreptitiously by about 13 percent through a variety of surcharges, levies, superfast categorisations, and the unscientific application of the “tatkal quota” regime. And well into this decade they have been voracious, by hiking the tatkal quota allocation to a huge 30 percent. I believe scientific thinking necessarily is the basis of reform. Mr Railway Minister needs to tell us which scientific survey told him that 30 percent of passengers book their tickets only in the last 24 hours — for the uninitiated, this is the window the railways provides for a tatkal booking and you are charged a hefty premium for it.

And since 30 percent tickets are reserved for tatkal there is a 0.3 percent or even higher probability that you will end up in the tatkal queue. 

Those planning a long travel, our non-reformist gut tells us, would do so between two months to two weeks in advance. Those actually waiting for the last 24 hours, given India’s legacy of the economics of scarcities, should be around 5 percent, and no more. Mr Bansal should then tell us why a huge 30 percent of the travelers are being forced to cough up the tatkal premium. Was that not a substantial and an unfair fare hike already imposed on the commuter, Mr Minister? And then you say there has been no fare hike in the last many years!

Like NREGS, this is Indian Railways’ TREGS (Touts Re-Employment Guarantee Scheme) — helping the tribe that had become dispossessed with the dawn of technology. The artificially created scarcity, thanks to the huge tatkal quota allocation, generates a mad rush for reserved ticketing even in off-peak months.

Besides helping the railways officially overcharge customers, it has created a play area for touts. Talk of employment guarantee by the UPA!

The beneficiaries of this new employment have now taken this process to its logical conclusion. With 25 percent bookings, and increasingly more, going to the railways’ website, the internet-based reservation was serious competition to touts. But the reinvigorated touts have allegedly colluded with those who maintain servers of IRCTC (the website that officially books tickets for you) and have ensured that the site books virtually no tickets till almost all tatkal tickets are sold.

Even if you manage to log in, you could end up with several snags: the new pages not loading, service being unavailable, or, in the end, a deformed page as shown below which will not let you transact —even if you transact, your bank transaction may not conclude for a long time.

Reforms: only for govt, not for aam admi?

Mr Bansal, why don’t you think of some reform at this end of the value chain? Or did you think reform is only to fill up government coffers and not for the aam admi?

Should ‘reform’ not involve a basic audit of the end of your value chain, where customers pay you money, Mr Bansal? You just cried that you were not earning enough money from them; you just said passenger growth was not on expected lines. Here is a bucket load from a class that pays you a premium for booking on the website — for the uninitiated, Indian Railways is the only transport company on earth that charges you a premium for booking through their portal — almost all others give you a discount.

Let’s have some reform here, Mr Bansal. Can we have an external auditor publish the server performance statistics of www.irctc.co.in? And why it virtually carries out no bookings between 10 am and 11 am? Why, just eight months ago, it was possible to book tatkal tickets on the website. So what has changed so drastically in the last eight months that the website has become virtually non-functional between 10 am and 11 am — a time when nearly 30 percent of your tickets get sold?

Did someone repeatedly say better passenger service for higher fares?

Significantly, the New Delhi Consumer Forum had recently ordered IRCTC to compensate Rs 5,000 to a waitlisted passenger who complained that his waitlist status had been tampered to affect his final availing of a confirmed birth. Such, Mr Minister, is the credibility of the systems that seek to thrust reform on their customers!

With most people in the reservation queue from 8 am to 10 am paying much more to the touts than they pay the railways, can this revenue not be formalised in some way? Lalu Prasad had formalised the informal freight revenue by simply legalising the enhanced freight carrying capacity. If the number of intermediaries was reduced, including the booking clerks, and a part of the grey premium is formalised, the overall revenue accruals for railways could be enhanced while actually reducing the burden on the passenger.

Any takers for this reform?

Customer, the king? Not for railways

More on reform: how about being customer-centric to enhance your revenue, Mr Bansal? Let’s take a case study here. Ever since the no-frills airline boom, aviation data has clearly indicated that Mumbai-Delhi is the leading sector in India, followed by Mumbai-Bangalore. The position may have changed a bit here and there but they hold largely in terms of the sense of proportion. This means there was a huge potential for speedier intercity trains, and between many urban metros in India.

If the airlines could have half a dozen new profitable routes, the railways, with its vast network, should have had atleast two dozen.

But here’s what Indian Railways did. The Duranto Express from Mumbai to Delhi was scheduled such that it would not attract any business traffic. It leaves Mumbai at 11.15 pm — too late in the evening — and arrives at 4.55 pm the next day at Nizamuddin. That’s a 17-hour-40-minute schedule for no commercial stops between Mumbai and Delhi.

The existing Rajdhani Express covers the same distance in less than 16 hours, with four commercial halts, and a business-savvy schedule.

As the months went by, the Rajdhani waitlist began piling, with Duranto being an also-ran. Last week, Western Railway decided to push for one more Rajdhani with a similar business-savvy schedule. But could not have the Duranto in the first case have been put on the business-savvy schedule? So much of lost revenue from the waitlisted Rajdhani passengers could have been recovered.

And hold your breath, the Mumbai-Bangalore route is worse, with the progress in even doubling the track, forget an electric traction, has been pathetic. And there is a high freight-earning cement hinterland on the way for those who talk of the lower profitability of the passenger segment.

It does not take astronomical investments to bring in this change. A Duranto-style train between Mumbai and Bangalore, or for that matter between Mumbai and Chennai, is not even on railways’ agenda. Reforms? Market feedback? Focus on customer? Seems like Martian lingo.

Now come to the favorite takia kalam of Indian Railways: second-class seating and ordinary passenger fares are heavily subsidised, and they constitute the bulk of passenger revenue. It is not that these passengers do not have the ability to pay, but Indian railways fails to target ancillary revenue. Does the railway ministry have any idea of the amount of daily ‘haftaa’ an idli or a vada-paav vendor pays the various policemen/TTEs? They make good revenue from the same passenger whom Mr Bansal is grudgingly subsidising. 

According to a report, a paanipuri-wala in Mumbai pays Rs 100 per day to prevent being charged from carrying suspicious liquid on the train (see http://articles.timesofindia.indiatimes.com/2011-05-28/mumbai/29594515_1_rpf-men-rpf-cop-railway-police). Ditto for those selling their wares outside railway stations. And this story was written back in May 2011; so adjust amounts as per inflation.

Basically the periphery of commerce that a railway station can command itself has a lot of revenue to offer. What progress has the Rail Land Development Authority (RLDA) made in the six years since it was constituted? The RLDA was supposed to engage as many private-public partnership (PPP) projects as was possible to bring in revenue from commercial and air space exploitation for Indian Railways. If it has not brought in that substantial revenue that you were looking forward to, should it also not be subject to some ‘reform’?

Lastly, we must talk about productivity of railway employees. A simple statistic indicates how inefficient the organisation could be. While the Chinese railways carry 1.6 million tonnes of freight per employee, in India it is about 1.1 million tonnes per employee — we are almost a third lower in terms of our productivity. We compare unfavorably to most other South Asian railways as well. Given that revenue generation capacity of the network is suboptimal, we have got the taxpayer to further subsidise it by having him foot the huge pay commission bills.

The sixth pay commission easily pulled the operating ratio of the Indian Railways some 9 percentage points upward by adding more than Rs 10,000 crore to the annual wage bill of Indian Railways.

If an operation is suboptimal by international benchmarks, and it gets a handsome pay hike, that hike itself is the biggest subsidy. No one seems to be talking of that big ‘subsidy’. Rather, mango people like us, who don’t have access even to a transparent ticket reservation system, are being told that we have been pampered enough. Well, here is the verdict from the mango people: whether you succeed in reforming Indian Railways or not, we know for sure we are heading faster than ever before to become a banana republic. Talk of salads!