As Suresh Prabhakar Prabhu cautiously steers the Indian Railways towards restructuring, he asks why the Finance Ministry should not bear the pension cost of the Railways — the largest employer with 2.3 million staff and pensioners — and the only organisation that pays both its staff and pension costs from its revenues. In an interview to BusinessLine, he also says time has come to take a call on whether there should be a single Budget, a move that will automatically answer many questions. And while he says tariff related decisions will be taken by the regulator, there is a chance of the railway users paying a cess to create a dedicated non-lapsable fund. Excerpts:
How will you increase freight and passenger earnings this year?
We need more infrastructure investment in order to increase freight and passenger earnings. We also need policies to increase the share of freight, we have reduced freight tariffs. We have appointed customer account managers. We are directly meeting stakeholders and including their feedback in the policies.
Additionally, we are trying to get more from parcel traffic by widening the freight basket. We are launching different products such as Tejas and Antodaya to target different passenger segments — air and road passengers.
How do you plan to lower cross subsidisation?
The process has already started with cut in freight charges. We are going to have a regulatory body in the next few months — either through legislative or executive process — that will fix freight and fare in a proper manner. Also, we must keep in mind about losing passengers, we should be careful while deciding the fare. Acquiring customers is important, retaining them is even more important.
How do you intend to raise funds for the Special Railway Safety Fund (a non-lapsable fund)?
I have written to the Finance Ministry. We are keeping them on board. The fund will be used towards track renewal, signalling and road-over bridges. On safety, road cess comes from diesel. We are the largest user of diesel, we contribute to that and we don't get anything in return. We should get the entire amount back.
I am in talks with the Finance and the Road Ministries to work out some modality so that the Road Ministry can take over at least unmanned level crossing and build road-over bridges and road-under bridges. After all, to make unmanned level crossing safe, we are constructing roads over the rail tracks.
Also, there will be some other gross budgetary support and some extra budgetary source. So, we will be able to remove all unmanned level crossings and improve safety.
The last time the SRSF was created (a five-year non-lapsable fund), it was done by imposing a cess on passenger and freight segments. Will you have a similar mechanism now?
That is one of the options because the entire amount cannot come from the Budget. Some portion has to be raised from the users. The idea is to create a non-lapsable fund. This is definitely on the cards.
As you embark on restructuring of the Railway Board, what are the biggest challenges you face from an HR perspective?
We started in right earnest. We don’t want to bring change for the sake of change. We have created the mobility and non-fare revenue directorates. There will be eight more such cross functional directorates to achieve specific targets. We have already started talking to our officers to probably have a unified service — if not all, definitely some services should be merged to have a unified service. It will bring in a new type of culture in the Railways over a period of time.
I feel what was contemplated by various experts — we are trying to implement in a way so that it does not result in unnecessary irritation. And we get more than the desired outcome. Some are under consultation.
What about production units (in case the traffic declines), given that Railways has awarded assured business contracts to private companies (GE and Alstom)?
I have asked the Member-Mechanical, and NITI Aayog for suggestions. Idea is to how to make them better. It is a priority area. How to bring new technology, how can they upgrade it. We are working on a comprehensive plan for them.
You have started accounting reforms. How has the progress been in the last one year?
The earlier reform that was talked about was very rudimentary. We are now working on a comprehensive package so you can take the budgeting to outcome. In the Ajmer division, it has already been rolled out.
How can you create a balance-sheet without knowing your fixed assets? How can you prepare a profit and loss account without having a costing mechanism in place?
We are now preparing an Enterprise Resource Planning — completely for IT. It is a comprehensive process. The entire terms of reference are being prepared. In the next few months, we will call for bids and get some company to operate it.
Budgeting to outcome cannot be done till we have the ERP in place.
In the last one year, what were the surprises for you?
A big surprise was the freight market not picking up. The core sector was not picking up as the the core sector growth was not as anticipated. The Bonus Act was amended, improving the bonus was a good move for the working population of India, but the Railways had to bear the burden as we have the maximum employees. The Seventh Pay Commission was another surprise.
On the pension front, is some mechanism being worked out that will help the Railways manage the cost better?
I don’t see any reason why the Finance Ministry, which handles the pension of all government employees, should not handle the pension of railway employees. In any case, if two Budgets are merged, this issue will not arise.
We should think about whether there should be one single Budget. Automatically, a lot of things, including this, will get addressed. Time has come to clearly look at these issues seriously.
But, if the budgets are merged, what happens to the ongoing process of restructuring the Railways?
Look, there are so many companies under various Ministries. There is NTPC under power, ONGC under Oil Ministry. They will be like that.
What about the study on having a holding company of railway public sector units? Are we going to see some amount of disinvestment in such a company?
We are keen on doing that. SBI Caps has already done the due diligence. In the next few months we will take a final call on that.
Disinvestment, it is too early to say. At least, we will create a structure like this.