Railways Restructuring

In News

• Recently, the Indian Railways has announced the closure of the Special Railway Establishment for Strategic Technology and Holistic Advancement (SRESTHA).

Key Findings

• Recommendations of the Principal Economic Adviser Sanjeev Sanyal for Rationalisation of Government Bodies: The restructuring plan of the country’s largest employer and transporter which is resulting in the closure or merger of major establishments and private participation in running hospitals and schools is in line with the recommendations.
• Winding up of these organisations: 
  • The Central Organisation for Railway Electrification (CORE), the Central Organisation for Modernisation Of Workshops (COFMOW), the Centre for Railway Information Systems (CRIS) and the Indian Railways Organisation for Alternative Fuel (closed on September 7, 2021). 
  • These establishments proposed for closure have crucial modernisation, technological and research-oriented goals in the near future. 
• Winding them up prematurely:
  • defeats the very purpose of their creation 
  • demoralises the officers/employees who have been part of the mission. 
• Parts of restructuring: As part of the restructuring plan, the railways also decided to merge 32 Directorates of the RDSO and brought them under seven verticals:
  • Administration, 
  • Infrastructure, 
  • Rolling Stock, 
  • Traction and Power Supply, 
  • Signal and Telecommunication, 
  • Resource and Testing and 
  • Traffic and Psychology.
• New posts: The railways also proposed to create new posts in the rank of Executive Director, Design, to be posted at the Integral Coach Factory, Chennai, Rail Coach Factory, Kapurthala and Modern Coach Factory, Raebareli, under the Railway Board’s Rolling Stock Directorate. 
• Vision derailed: The railways continued with the closure/merger of crucial establishments despite stiff resistance from the employees’ unions. Organisations such as the IROAF were formed with a long-term plan of promoting green fuel. Such a vision was now getting derailed.
• Disruption of systems: The establishments recommended for closure were functioning efficiently and contributing for greater efficiency of the Indian Railways.

Reforms proposed by Indian Railways

• Allowing private entry, including in running of private trains; 
• Changing the composition of the Railway Board;
• Decentralised decision-making to zones/divisions and even further below; 
• Separating the core functions of running trains from non-core functions like schools and medical services; 
• Setting up a regulator; 
• Unifying various railway services; Transit to commercial accounting and
• Uniting the Railway Budget with the Union Budget.

Image Courtesy: Rail 

Special Railway Establishment for Strategic Technology and Holistic Advancement (SRESTHA)

• It was a special unit of Indian Railways composed mostly of scientists and railway experts.
• Established in March 2016, the SRESTHA directorate, part of the Research Designs and Standards Organisation (RDSO).
• Earlier, Indian Railway had a research arm called “Research Design and Standards Organisation (RDSO)“. However, there were several issues with this RDSO. 
  • In most of its time, the RDSO was busy in finalising the standards and specifications for the new equipment to be acquired by Railways. 
  • Since most of the new technology in Railways is imported, the RDSO was not able to do in-house research work on various technologies required for upgradation in signalling and telecommunication system, track designing, improvement in rolling stock etc.
  • But despite these issues, RDSO was credited for development of pre-stressed concrete sleepers used for laying tracks and the then newly designed double Decker coaches. 
• Functions of SRESTHA:
  • It was responsible for long-term research for improving the overall functioning of Indian Railways. 
  • It was headed by a reputed scientist, who reported directly to the Chairman.

Significance

• More posts for jobs: The creation of the top ranking posts assumes significance in the backdrop of the decision to roll out more than 200 Vande Bharat rakes at an estimated cost of ?26,000 crore.
• Increased efficiency: A private firm is interested in making a profit, and so it is more likely to cut costs and be efficient. If the firm is inefficient then the firm could be subject to a takeover. A state-owned firm doesn’t have this pressure and so it is easier for them to be inefficient.
• Less political interference: With the presence of private investors in Indian Railways, there would be less political interference. In the current scenario, the majority of public-sector enterprises in India are working under political pressure.
• Improved Infrastructure: Such reforms help in better infrastructure which in turn would lead to improved amenities for travellers.
• Lesser Accidents: As there will be better maintenance it will reduce the number of accidents, thus resulting in safe travel and higher monetary savings in the long run.

Issues in introducing reforms

• Surge pricing in tickets: With privatisation, there would be a hike in the ticket prices as private operators would seek to earn maximum profit. The poor sections of society will not be able to afford the ticket prices of trains.
• No more welfare agenda: Indian Railways provide special concessions to women, old, disabled, defence etc. If railways get privatised then there might be a possibility that such concessions will not be given to the people.
• May affect accessibility: Indian Railways connects even the remotest parts of India. It is making constant efforts to make it accessible to remote places. In case, railways will be run by private operators then there are chances that it will not be running in the remote areas as it will generate less profit from such areas.

• Privatisation: Monetisation and corporatisation will ultimately lead to privatisation.
• Unrest: There was widespread unrest and resentment against the proposal of the Principal Economic Adviser for closure/merger of institutions/bodies of the railways.
• Chaos in system: The radical proposals in the name of “rationalisation”, if implemented, might lead to chaos and disruption of systems.
• Affects efficiency: Such measures cause a serious setback to the orderly and efficient functioning of the railways.

Way Ahead

• Creating  ‘competition for the market’ , i.e., developing private operations within a framework of public regulation and control.
• Policy coordination is necessary as there is significant interaction between sectors or other external effects.

Source: TH