Wages of sloth: Roots of the crisis lie in overstaffing

It ferries 1.38 crore passengers every day across 63,028.41 kilometres of railway line to 6,853 destinations. It operates the largest railway network in the world under single management, and is also the single-biggest employer, with 15.45 lakh people on its rolls. But the gargantuan size, far from being an asset, is precisely the reason why Indian Railways is running half-steam.

Its employee cost (including wages, allowances and pension fund), for example, stands at a crippling 45 per cent of total receipts. And fuel takes away another 17 per cent. That leaves precious little for the government, which got its first dividend in 2001-02 after a gap of two years. Says Railway Minister Nitish Kumar, who has won praises for a well-thought-out budget this time round: "I have applied my skills to improve the financial health of the railways."

By hiking passenger fares for the first time in two years, Kumar has aimed at an additional Rs 910 crore in receipts. And although he has rationalised freight rates (steel and cement pay less, but salt more), the railways should still be earning Rs 450 crore extra. The point, however, is that Kumar's measures are insignificant given the railways' problems. The Rakesh Mohan Committee, which was asked to suggest ways to make the railways more efficient, squarely blames the latter for suffering from a ''split personality syndrome''-of getting split between its abortive commercial forays and social sector obligations. In 2001-02, the railways was targeting to earn Rs 700 crore by leasing the right of way along its tracks for fibre optic laying. Another Rs 200 crore was expected from the lease of railway land and air space (overhead cable pathway), and Rs 100 crore from advertisers. Instead of Rs 1,000 crore, the railways managed only Rs 183 crore.

Then, there are certain social service obligations that the railways fulfils at the cost of its bottomline. These include laying tracks in uneconomic areas (cost: Rs 3,413 crore in 2001-02), "coaching services" like parcel and catering (loss: Rs 5,104 crore) and subsidies on freight of essential commodities (Rs 309 crore). Thus, the obligations currently stand at a staggering Rs 8,826 crore. "The root cause of the financial crisis in the railways is overstaffing, as there has been no attempt to link wages with productivity commitment,'' says S.K.N. Nair, Senior Consultant at ncaer.

While the railways headcount has come down from a high of 16.54 lakh in 1991-92 to 15.45 lakh today, the average cost per employee has risen steeply-from Rs 35,528 to Rs 1,21,281 in the same period. In other words, employees are being maintained at the cost of better railway infrastructure. If its new budget is any indication, then the railways does seem serious about ending populist policies. But it will need several more such budgets to get on the fast-track.