Is the Indian Railways the government’s new start-up experiment?

Revamping the Indian Railways may purchase the government a new lease of life.

 |  6-minute read |   14-09-2017
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For four months now – until two days after the Cabinet reshuffling under the NDA-led government – the Indian Railways had been in the headlines for nearly all the wrong reasons. Under the new minister for the railways, Piyush Goyal, it seems India is hoping for an infrastructural and administrative transformation.

And the railways are quite clearly back on the track – of self-advertising its potential short term goals, derationalising the need for effective communication about the recent failures of the railway system, leading to at least six derailments in the last four months, in Uttar Pradesh, Bihar, Maharashtra, and Delhi. The Opposition, led by the Congress, has perhaps tacitly decided not to speak on the railways, except in the case of a new derailment.

Leasing thy neighbour

Almost all major headlines of failures or successes of the Indian government – such as Cabinet reshuffling, implications of GST in MSME sectors, the grand publicity and branding campaigns around demonetisation and the cessation of the Doklam standoff – have been mitigated by Japanese interests clouding over Indian bullet trains.

Today, September 14, 2017, has been chosen to anoint the Indo-Japanese collaboration over the Mumbai-Ahmedabad Hhigh-Speed Rail (MAHSR), for which India is about to receive a soft loan of about 1 lakh crore rupees, from Japan.

With Shinzo Abe’s overwhelming support to leasing his technology and talent to India’s cause, the Chinese premier, Xi Jinping, is not far behind. China “has been aggressively marketing its high-speed rail technology…[and has] lobbied hard to get the first contract in India.” It is now renewing its interests and feasibility studies of reopening the New Delhi-Chennai corridor.

Statistics of derailments in the Indian Railways may very well land up in a cold storage. But the way the government has campaigned for the bullet trains as a salvation to India’s older railway culture and technology has certainly been turning Chinese eyeballs. They are making serious headway in India’s railway developments, by taking up the modernisation of Indian railway stations, collaborating on an Indian Railway University, and training Indian railway officials.

The Chinese foreign ministry believes that a railway collaboration between the two countries is a pragmatic solution to the economic and logistical needs of South Asia and that a consensus is certainly forming over China’s new role in India’s railways.  All of this comes about a fortnight after the resolution of the Doklam standoff – an international political conflict which had had an uncanny although indirect relation with India’s and China’s railway expansions in Kashmir and Tibet, respectively. 

India has very successfully been able to influence China, as well as its own citizens, that the nation is truly modernising its railways, despite the loss of a hundred odd lives over derailments – much like the occupational hazards of demonetisation. Leases from powerful neighbours have enabled the Indian Railways for heavy-duty promotions. Australian private firms have also entered the fray, in a 2.8 lakh crore plan to revamp the Indian railway system.

Very little however has been spent by the government in educating the masses what measures it is taking to design collision-proof LHB coaches, formally establish the Railway Regulatory Authority of India, or implement any of the other pending recommendations of the Anil Kakodkar or the Bibek Debroy Committees, for instance.


The enormous start-up experiment

2022 is when India will supposedly hit its peak in demographic dividend, as well as the peak of notional revenues of Narendra Modi’s "Make in India" campaign. It may also be the time when the Indian Railways may become the biggest case study in the nation’s dodgy start-up career. A new revenue model is emerging vis a vis food cartels, as the Indian Railways plans to graduate to clients like the Paris-based Sodexo. Pricewaterhouse Coopers is carrying out a feasibility study for developing base kitchens, thus reducing the load on pantry operations in the railways.

The government is taking its citizens through a massive educational curve on the improvement of catering quality, no more tipping the railway staff, and economical prices of food. It is no coincidence that the new minister for the railways is also a chartered accountant and a lawyer, as his predecessor, and is adequately informed on this massive branding campaign and cross linking of services.

Despite the magnitude of the investments in the railways, its revenue projections and market intangibilities are behaving in an adhoc way, as in the case of start-ups that simply want to aggregate grocers, meat sellers, plumbers, and other vendors, in lieu of a self-sustaining innovative solution. 

The IRCTC is roping in multinational players and a host of services from the tourism and hospitality industry, with visions of becoming a service aggregator. The railways are essentially functioning like a start-up in the making, with very ambitious plans and investment, although without the essential innovations or disruptions in their proposed revenue streams or market intangibility factors.

Revamping the Indian Railways as a massive start-up experiment, and running it on a subsidised economy may purchase the government a new lease of life. But whether it helps the industry or the start-up economy of the country is very difficult to answer. Imagine a JustDial, Alibaba or eBay with multinational services from Japan, China, Germany, and Australia. The Indian Railways is shaping up to be one such venture, with the promise of close to 40,000 new jobs, over the next five years. 

That is a paltry three per cent of the jobs that we are told we will get back, of those that were lost due to demonetisation. This is a stupendously myopic interpretation by the government of its own "Make in India" campaign, whereby it is trying to use manufacturing and technology for internal purposes with foreign subsidy, in the hope that whatever talent emerges out of this may be put to use in a mythical future for manufacturing export goods – such as rolling stock. Was not "Make in India" supposed to earn dividends during the lifetime of this government, or indeed, our own lifetimes?

Recent committees on the railways have proposed the much-needed privatisation of non-core railway institutions such as schools and hospitals. Whether or not that happens, education, healthcare, and agriculture are the areas in which Indian start-ups have tried to make inroads. What is the railways going to do in these sectors, besides boasting about including tourism and hospitality into its interdisciplinary economics? This question may sound absurd to railway economists.

It is equally absurd to the think that in a country where more than 130 million people live of less than 200 rupees a day, the government is willing to pay an interest of up to 80 million rupees a month, to Japan. These are serious verticals and recommendations and questions that the Government needs to address, through its multi-billion dollar start-up experiment – the direction in which the railways seem to be headed. The battle in the nation’s railways has certainly been lost to social media aspirations. Is the government now preparing for war or bankruptcy?

Also read: Rahul Gandhi in US: How to take questions and how not to answer


Arup K Chatterjee Arup K Chatterjee @chatterjeearupk

Author, 'The Purveyors of Destiny: A Cultural Biography of the Indian Railways,' Founder Editor-in-Chief, Coldnoon (International Journal of Travel Writing & Travelling Cultures), Assistant Professor, English Jindal Global Law School, O.P. Jindal Global University.

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