Indian Railways: The contours of Nav Arjan, Nav Manak and Nav Sanrachana

Indian railways, as pointed out by Railway Minister, are faced with two headwinds, entirely beyond its control. Firstly, the tepid growth of core sector in the economy leads to sluggish demand for rail services; and secondly, the looming impact of the 7th pay commission and increased productivity bonus pay outs.

In the Railway Budget 2016-17, the minister Suresh Prabhu has chalked out a new plan to reorganise, restructure and rejuvenate Indian Railways which has three pillars viz. Nav Arjan, Nav Manak and Nav Sanrachna.

Nav Arjan

Nav Arjan means “new avenues to earn“. Traditionally, railways increase its earning by hiking fare. The government wants to change this path and now wants to focus on new sources of revenue {i.e. non-tariff revenue} to that every tangible and non-tangible assets of the railways can be monetized. We note here that the Railways is planning to leverage the existing land, stations and tracks besides advertising to generate additional revenues and improve its financial health. Currently, the non-tariff revenue in railways is nominal at around 5% of total revenue. This figure stands at 20% for some countries. The possible paths to make efforts towards moving higher non-fare revenues may be the following:

• Monetize the land and buildings through allowing commercial use
• Leasing out lands adjacent to the tracks to promote horticulture and tree plantation
• Exploring the possibility of using railway tracks for generating solar power
• Outdoor advertising at stations and other buildings of Indian Railways.

But reality is that none of the above is a new idea. These ideas have existed since long and have wanted proper implementation ever since they were put in place.

Nav Manak

Nav Manak literally means “New norms.” By New Norms, the Railways wants to improve efficiency in spending its each rupee. The railway minister brings in the concept of Zero Based budgeting here. We recall that the zero based budgeting is a method in which all expenses for each new period are justified and no reference is made or considered for previous year. In other words, it involves preparing budget which every year must start from scratches with no pre-authorised funds. This kind of budgeting needs each activity to be justified on the basis of cost-benefit analysts and assumes that no balance is carried forward.

Nav Sanrachna

Nav Sanrachna literally means “New Structures”. The minister puts it like this: “We need to Re-imagine the conventional ways of solving issues. Co-operation, Collaboration, Creativity and Communication should be the hallmark of our decision-making and actions. We will revisit all processes, rules, and structures to enable this transformation of IR. We will draw upon our inherent strengths, diverse talents and rich experience to emerge stronger.”

Nav Sanrachna encompasses all aspects of Indian Railways operations and might include: (1) improving cross functionality (2) reorganization of the Railway Board (3) Consolidation of Railway cadres and (4) establishment of RPIO.

Improving Cross Functionality

To improve the cross functionality, the new cross functional directorates would be set within the Railway Board to give a thrust to areas like non-fare revenues, speed enhancement and information technology. Thus, a new directorate related to mobility and speed can be expected in Railway Board.

Reorganization of Railway Board

The government is looking forward to reorganizing the Railway Board along business lines and suitably empower the board’s chairman to lead the organization effectively. However, if this may lead to centralization of power – is subject to debate.

Consolidation of Railway Cadres

The railways may consolidate multiple railway cadres to improve efficiency and reduce duplicity of work as per recommendations of the Bibek Debroy committee on rail modernization.  We note here that Indian Railway makes appointments under eight Group A services of which five are technical while three are non-technical. These are Indian Railways Service of Engineers, Indian Railway Service of Signal Engineers, Indian Railway Service of Electrical Engineers, Indian Railway Service of Mechanical Engineering, Indian Railways Stores Service, Indian Railway Accounts Service, Indian Railway Personnel Service and Indian Railway Traffic Service. The Bibek Debroy commitee had suggested consolidating them into two cadres.

Railway Planning and Investment Organization

To further improving planning and practices, the Indian Railway also plans to set up a Railway Planning and Investment Organisation (RPIO) which would chalk out five and ten year corporate plans and then identify the projects to achieve business goals.

Further, Railways will also bring out a National Rail Plan 2030 to provide it a long-term perspective for augmenting the rail network. Railway is already creating a Rail Development Authority to enable fair pricing of services, promote competition, protect customer interests and determine efficiency standards.

In summary, Nav Sanrachna is all about reorganise restructure and rejuvenate Indian Railways for long term perspectives. It has less to do with the present disease of poor demand for railways due to sluggish economy.