Railways has a wagonload of woes

Railways Minister Suresh Prabhu will have to address formidable problems faced by both commercial and individual users if he is to bring about some improvement in the operations and financial health of the Indian Railways. There is a shortage of rolling stock, inadequate attention paid to safety and total disregard for minimum passenger conveniences, not to speak of comfort.

The acute wagon shortage is affecting the railways' core operation of carrying freight. Unless the national carrier is able to carry out this profitable part of its business, there is no hope of it arresting the steady deterioration in finances of the past few years. In the three years between 2011 and 2013, India's GDP grew by an average 6.7 per cent whereas net tonne km of freight carried by the railways rose by a compound annual rate of just 1.5 per cent.

The wagon-buying programme is running a year behind schedule, according to a former Indian Railways official. No tenders have been issued for the current financial year; the orders recently issued relate to the 2013-14 financial year.

It is understandable if some tightness in wagon availability emerges during the busy season when freight offerings are at their seasonal peak, but wagon shortage has now begun to show even during the lean season. Last year, the Indian Railways lost considerable business during the peak January-March period because of a shortage of covered wagons used to ferry items like foodgrain and cement. There was also an unmet demand for box-type wagons.

The wagon shortage has emerged because of inadequate ordering in recent years. The railways has an annual demand for 17,000-18,000 wagons. This can be met through its own capacity of 5,000-6,000 wagons, and external procurement of 10,000-12,000 wagons. Last year, actual orders placed with the private sector were for a mere 9,000 wagons. In trying to tide over this situation, the railways has adopted two strategies: One, "condemning" or junking old wagons is being delayed, and two, the periodic overhauling of wagons is being postponed. Both carry the risk of compromising safety and increasing the chances of accidents.

Various reasons are being cited for this undesired situation. The acute scarcity of funds is one. Another is the assumption among planners that through gains in efficiency like lowering of wagon turnaround time, you can get more wagon kilometers per wagon-day. While both are valid arguments, what has also contributed to the shortage is a glitch in the procurement system. When a tender is issued, the lowest price is accepted and all bidders are asked to match it. The entire order is then apportioned out among the participants, and it is through this exercise that the process is manipulated and particular suppliers favoured.

After Mamata Banerjee began her second stint as railway minister in 2009, the national transporter, through its vision document, projected an annual demand of 25,000 wagons. As a result, several private suppliers made considerable investment. Today, they are starved of orders.

The former senior official laments that at one time "the procurement system of the railways was known for its transparency and soundness, to the extent that it was copied by other organisations. But after the departure of (former minister) Lalu Prasad, there has been a decline."

After Banerjee assumed charge, action was taken against three board-level officials for lapses in the procurement processes, but, says the official, "most unfortunately, proper systems were not restored. The result is that when officials down the line see systems being compromised, they become part of a general decline in standards. Even a technical setup of the railways, the Research Design and Standards Organisation, has been compromised."

All you need to do to favour one supplier over another is to play around with the tender requirements - like the number of years of experience in a particular product line or specifications. "Another way in which the system is compromised is by ensuring that no procurement file in the Railway Board remains confidential," says the former official. "Internal notings are photocopied and made available to those who pay for such information. With knowledge of the direction a purchase case is taking, potential suppliers (read tenderers) can compromise the system."

Shortages are not limited to wagons but stretch to locomotives and passenger coaches too. In the case of the former, two locomotive factories in the public-private partnership mode that have been planned for years - at Marhaura for diesel locos and at Madhepura for electric locos, both in Bihar - are nowhere in sight.

Shortages of locomotives for freight trains will emerge in three years if traffic growth proves buoyant along with revived economic growth. What queers the pitch further for such locomotives is that they are sometimes diverted to haul passenger trains whose numbers keep rising with every Rail Budget.

In the case of passenger coaches, the absence of any back-up capacity creates a chain of delays if a train arrives late at its end point since it is the same train that has to turn around for another journey. For some passenger trains, safety has been compromised by the need to cut corners and the failure to take corrective action. The LHB type of coaches, used for more important passenger trains, suffer from a defect that results in sudden jerking. This is caused by using traditional types of couplings with these newer types of coaches, thus creating a mismatch. "The organisation can be saved only by bringing back integrity," says the former top official.

Another former senior official who has held customer-facing positions foresees serious challenges ahead in the winter months when fog will create delays. The weather-created disruptions will have a ripple effect and cause immense inconvenience for passengers. He points out that this is in addition to inadequate services related to lights and fans not working and poor food and dirty linen being laid out. "The Railway Board has monitoring systems to address these issues, but such is the morale even at the top that there is all-round drift," the former official sighs. Yes, the railways minister does have a task on hand.