Sunday, July 10, 2011

Why be surprised with yesterday’s railway accident.....more are bound to happen

I have written twice about the mess in the Indian Railways. My first piece was titled “Privatize the Railways” (Jan 12th, 2011) and was triggered by continuing problems of service quality and safety in the railways while the airlines sector (especially the low cost airlines) was booming and taking market share away from the railways. The second piece was titled “Indian Railways budget: Looks like a comedy show but is really the biggest scam” (Feb 26th) and was triggered by the pathetic annual ritual of the presentation of the Railways budget every 25th of February. This piece is a continuation of the same thought and is triggered by the accident that killed 30 hapless people yesterday.

I cannot understand why there is so much anguish in the press about this accident. Why does it even merit front page coverage? What is so newsworthy of this accident that it triggers off yet another debate, yet another crib session against the Railways....and yet another piece of my blog?! Let it be said here quite clearly: There will be more accidents in the future and they will recur with a regularity that we only get to see in nature. All this crap about the Railways being a role model of socialism and being the real protectors of the poor is hogwash. The truth is that the Railways is a death trap and it’s just a matter of luck (or bad luck) who gets trapped in it.

What more can we expect when the Railways operates with an Operating Ratio of 91%. This means that the costs of operating the railways are 91% of the revenues. That leaves only 9% for everything else. What takes a haircut? Obviously, investments. With investments only to the tune of about Rs 1000 crores or so per annum, there is hardly any possibility of improvement in the existing infrastructure. In reality, what the Railways needs is a total overhaul. Demolish the existing. Create anew.

Just look at China for some inspiration. Their progress in technology development in the Railway sector there has now prompted Japan to file a Copyrights suit against the retort; the Chinese claim that their technology is vastly superior to Japanese technology. Their trains routinely run at speeds in excess of 300 km per hour while our trains start to jump their tracks at 100. They are now exporting rail technology around the world......and hold your breath.....they have proposed to build a railway line from London to Beijing which will cover 8000 kms in just 2 days. This is no fantasy. This is an actual proposal made last year by the Chinese to the British government. This is not the only offer the Chinese have made to foreign governments. There are at least 17 other governments in talks with the Chinese to build rail lines that crisscross all of Asia and Europe. And look at investments in their domestic sector. The Chinese are investing close to 700 billion dollars to build a state of the art railway sector. The world’s fastest train – the Harmony Express – has a top speed of 400 km per hour and covers the 1000 km distance from Wuhan to Guangzhou in just 3 hours flat. It’s not surprising then that the number of accidents in China is far lower than in India. A quick look at the data readily available on the internet shows that between 2000 and 2009, there were 705 deaths due to accidents in India (not including terrorist attacks like the Samjhauta blast etc). The same number in China was 15 deaths. We had accidents in 9 out of these 10 years; the Chinese in only 3.

What’s the way out? I have often complained with our tendency to“mix issues”. This is easily seen in the case of the Railways. The Railways are mixing two issues: socialism (job creation, upliftment of society etc) and operating a train service. These two simply cannot be mixed. If the Railways have to run a professional railway service, they have to be run professionally. There is no way they can employ 14 lac employees and spend 42% of the costs of operation on salaries. On the other hand, Jet Airways has a wage bill of only 11% of its operating costs (I can only use data from the airline space since there is no other railway company in India). In contrast, the venerable Tata Group (also often considered to have several “government like” features in their jobs).....has a turnover of more than Rs 1.5 lac crores and employs only 1.8 lac people. If the Railways did not have so many employees on its rolls, it could afford to spend more on safety, maintenance, laying new and better tracks and doing some R&D of its own.

The other urgent solution to consider is to privatize the Railways. Now I don’t mean that the Railways must be sold off to the private sector, but what I do mean is that the Railways must rent out its infrastructure or private players to start their own train services. Just like what happened in the airline space. In the initial phase of privatization of airlines, the Airport Authority of India (a GOI enterprise) offered its infrastructure to private airline operators to operate services. In the same way, the Railways could offer its existing railway lines, the signaling infrastructure, the platforms.....etc to private players to start private train services. The private operators would be able of offer higher quality services by charging more monies (something the government is loathed to do). The Railways in turn would earn “rental” income and could use this to build infrastructure. And they could continue operating cheaper and lower quality services for the larger population. At some time in the future, even basic railway infrastructure could be privatized.

But eventually, the Railways have to understand that the times have changed. They need to themselves provide better services to the people. The people in this country are usually misunderstood. I don’t think they have a problem in paying more prices for the tickets....provided they could be given tangibly better services. Just look at the highways. In the last ten years, the quality of our highways has improved significantly, and almost all these roads are toll roads now.....but there have been no protests from the people.

The real truth is that all this shock that we express in our papers on train deaths is a sham. We do the necessary bashing up of the Railways every now and then and hope that will improve things. The reality is different. The solution needed is different. And no one talks of that. A few days from now, even this accident will be forgotten. Only to be remembered the next time it happens again.....that’s what is shocking.


  1. For the Past several years, railway passenger fares not raised, despite steep increase in diesel and electricity bills - for political reasons. One must know that "economics" does't bother about our local politics. No plan (doubling or new lines) is completed in a scheduled date. Let the railways have only the tracks and the trains be operated by private like AAI.

  2. Awesome blog... will like to add following points regarding privatization in railway
    (1) The customers who can afford and are willing to pay more for quality services will use the private service.
    (2) On the other hand; pressure on Government owned railway will increase to give quality performance. With planned improvement government railway can easily deliver quality results as they already have experience and infra... Now if they provide the same or lill bit less quality den what private players will provide.... and charge affordable rates den pressure would be directly created on Private players to provide service at near reasonable rates. Thus with existing infra,, da government can act as a leader for railway fair determination through forces of competition in the market. (BSNL can be a kind of case)
    (3) since it government institute dey will enjoy all da benefits of employing skilled person
    (4) thus competitive forces can be used effectively in railway sector

  3. @Dhruvit: Absolutely! You've elaborated very well. Thx!

  4. @ Prashant : Thanks