Sunday, March 29, 2009


In your opinion would ‘privatization’ of the existing production units improve quality and productivity ? commentAIntroduction:Of late, there is much talk of privatization of some activities of the railways. The activities are broadly classified in to core and peripheral i.e. the running of trains and the allied activities like the maintenance of coaches and wagons, hospitals, schools, colleges, welfare activities like institutes etc. there is much talk on outsourcing the peripheral activities. As such, the talk of privatization of repair workshops is in the air. The recent Public private Partnership – PPP has given fillip to such schemes.Before privatization of railways, the following points are to be seen.Railways and Balanced Economic Development:Railways in India have been the foremost agent of social transformation. The railway net work has changed the face of India. In the words of Shri P C Tandon,“ The Indian Railway System is almost a State with the State, with the largest industrial activity, the largest employer, a network of communications of track, telephone and telegraph that connects all parts of the country except the high Himalayas, moving vast number of peoples, traditionally peripatetic by nature, and quantities of goods chain of technologically advances manufacturing and maintenance units backed by it own research, development engineering and training institution of finance, higher training and teaching and consultation “. Prakash C Tandon, REPORT OF THE COMMITTEE TO STUDY ORGANISATIONAL STRUCTURE AND MANAGEMENT ETHOS OF INDIAN RAILWAYS”)Railways As Pace Maker:The Indian Railway as part of the Govt. of India has assumed of the entrepreneurial function to achieve the projected speed of economic development. Railway projects are of high cost and long gestation period. Therefore, the private sector will hardly invest in such projects, which eat away a large amount of profits. It is estimated that the cost of laying one Kilo Metre of B G rail link costs about Rs. 1 Crore. The KONKAN Railway is the best example to understand the magnitude of the cost of railway net work. Estimated to cost at Rs. 600 in 1990 now ended up with a cost of Rs. 3200 Crores in 1998.Railways as Resource Generator:For purpose of economic development, plenty of funds are required. Public Enterprises are meant to supplement the revenue of the State in a big way by appropriate pricing policies and by mopping up profits which otherwise may go to private sector. The Five Year Plans have pointed out the limitation of taxation for raising revenue and have alluded the need for raising revenues through Public Enterprises. The Third five-year Plan stated that in a developing economy the Public Enterprises constitute a ready and increasingly important source for financing investment either for the expansion of these enterprises, which yield these surpluses, or elsewhere in the economy.Railways have paid dividend to the General Revenues much more than the investment made by the Govt. of India.This is in addition to contributions to internal funds like Depreciation Reserve Fund (DRF), Development Fund (DF), Open Line Works Revenue (OLWR) and Capital over and above meeting the revenue expenditure.Railways and National Allocation of Sources:In many of the under developed countries, which are predominantly agricultural, over populated and under developed, resources are unevenly distributed among the people. The main reason for the expansion of Public Enterprises lies in the pattern of resource allocation decided upon under the Five Year Plans. In the Indian Railways the Capital expenditure is based on the National Planning Commission. For this purpose the Plan Heads maintained by the Planning Commission are incorporated in the Railways.Public Enterprises as Means to Achieve Social Objectives:A UN resolution stated that Public Enterprises plays an important and vital role in developing countries in as much as it helps in Capital Formation in fuller utilization or natural resource and in achieving a more equitable distribution of income and wealth. The Fourth Five Year Plan ,Second Draft described thus “Planning should result in greater equality in income and wealth that there should be progressive education of concentration of incomes wealth and economic power and that benefits of development should accrue more and more to the relatively less privileged classes of society and in particularly the Scheduled Castes and Scheduled Tribes whose economic and educational interests have to be promoted with special care“Avoidance of Concentration of wealth and means of production: Railways as a Public Enterprise helped to promote national objectives as laid down in the Constitution that the ownership and control of material resources of the community does not result in concentration of wealth to the common detriment. Railways being the bulk carrier are the backbone of the Indian economy. If it were to be in the hands of the private sector, the country would have faced with enormous difficulties and the private sector would have dictated terms to the country’s premier transportation mode.By treating the labour generously and by putting a comparatively low ceiling on the salaries and benefits at top level Public Enterprises has helped in reduction of disparities in income over a large area of employment. As on 31.03.2007, Railways employed 1.4 Million employees on the rolls and there are employment opportunities for every shade of jobs from software specialist to safaiwala from unskilled to specialized engineers, form clerk to financial analysts etc.Help to the underprivileged: Public Enterprises has been used to promote the development of certain backward sections of the society, namely, the Scheduled Castes and Scheduled Tribes. During 1978 Public Enterprises was also asked to make reservations in appropriate lower levels in respect of deaf, blind, and orthopaedically handicapped. Railway as a trend setter introduced the Roster Point Programme to ensure the Scheduled Castes and Scheduled Tribes get promotion by allowing the policy of positive discrimination.Further, as per the Central Govt.’s decision to extend the benefits of reservation in Jobs and Educational opportunities, Railways have earmarked percentage 27 for Other Backward Classes (OBC).Railways and Innovation:Public Enterprises have taken the responsibility to introducing certain new ideas in the process of management and administration. Accordingly, the Railway Ministry has spear headed certain Public Sector Undertakings:Public Sector Undertakings:Further, the following Public Sector Undertakings are also functioning under the Ministry of Railways.1. Rail India Technical And Economics Services Ltd.(RITES)2. Indian Railway Construction ( International) Ltd.(IRCON)3. Container Corporation of India4. Centre For Railway Information Systems5. Indian Railway Finance Corporation.6. Konkan Railway Corporation.The installed capacity of machines: various types of machinery from wheel lathe to traverser are installed in the workshops. These are meant to increase the productivity of the artisan staff. Such machinery is gradually being upgraded with the help of Workshop modernization under COFMOW – Central Organization for Modernization of Workshops. In case of corporatisation/privatization of workshops would be laid waste. Already due to modernization in coach and wagon building, the maintenance work is getting reduced. In such a situation, the installed capacity of machinery is to be utilized even if it meant doing work for outsiders – other Govt. depts, Ministries; State Govt. works private companies, Port Trusts, corporations and private individuals.The productivity of the labour: Railways being the largest employer of variety of skilled people large number of employees from unskilled to Master Craftsman exist in the workshops. In the past under steam loco scheme, the surplus employees were redeployed elsewhere. The trauma of the scheme still exists. The make use of the productive labour, the outside works can be executed in workshops as done by Defence workshops and Central workshop/Ponmalai. Such works can be profitably done by reducing the proforma on cost to maximum extent as per the guidelines given by the railway board in case of production units for enabling them to participate in the Global Tenders.Safety concerns: Railways being the lifeline of the Indian economy, safety concerns ought to the first priority. The corporatisation/privatization of workshops might jeopardize the safety of the rolling stock.Innovation and bench marking: To overcome such a disparaging situation, many production as well as repair workshops have shown keen interest in achieving bench marking and encouraging innovative ideas to increase the productivity of the workshop employees.Modernization: Raiwlay workshops have been taken up for massive modernization programme. The centre for modernization of workshops (cofmow) is formed with this aim to modernize railway workshops. Through various programmes like modern machinery, redesigning of workshop layout, improved working conditions, provision of rest rooms, revision of assembly lines, improved traversers, modern cranes, modern painting facilities including poly urethane painting, etc the productivity of the workshops have definitely improved.ISO certification: With changing scenario of globalization, the Indian railway workshops are gearing up to International standardization levels. Many workshops including production and repair workshops have obtained ISO certification, environmental certification etc for global competition and acceptance. The documentation process for ISO certification has identified the core and peripheral activities in workshops and the procedure for these activities have been laid down. Wherever necessary the outsourcing of the peripheral activities is done.Conlusion: privatization/corporatisation of the railways have not paid fruitful results all over the world. From the british rail to Japanese rail the process was a fiasco. The story is similar to all other railways primarily the massive rail networks, the multitude of personnel to manage, the huge investment in developing infrastructure and rolling stock and the public demand to keep railways as a public utility and not as a commercial concern. Thus the Indian railway workshops are poised to great heights even without being privatized/corporatised and are on the threshold to take up even outside work to utilize the full installed capacity of the workshops.

1 comment:

  1. Sir, Make the article by paragraphs with titles, which will help the readers, and create interest to read the subject. Mostly these subjects are dry eventhough useful.So, Sir please make these Railway accounts based articles with a motive of creating interest among the readers. This will motivate even non railway readers to read interestingly and new railway accounts men also. Hope that you will try to help in this way.

    With best wishes,
    Murali Krishnan.A.