THE GIST of Editorial for UPSC Exams : 30 JULY 2019 (Changing track (The Hindu))

Changing track (The Hindu)

Mains Paper 3: Economy
Prelims level : PPP model
Mains level : PPP model industrialization process in railway sector

Context

• Since budget there have been a series of developments pointing to a rapid process of transition in Indian Railways.

Decisions taken by the government

• The Centre wants to merge and corporatise the rolling stock entities such as the locomotive units, wheel and axle plant and coach factories, some seven production facilities in all.
• It has been reported that entire ‘train sets’ of EMUs and MEMUs will be produced by private players.
• The zonal railway officers have reportedly been asked to draw up a list of employees who will turn 55 or complete 30 years of service by the first quarter of 2020;
• This is with a view to identifying candidates for premature retirement in order to reduce the workforce to 10 lakh by 2020.

Steps towards PPP model

• Seen along with the Budget announcement “to use Public-Private Partnership to unleash faster development and completion of tracks, rolling stock manufacturing and delivery of passenger freight services”, the plan that emerges is of the Centre contemplating higher private investment in hi-tech areas such as the high speed freight corridor, while turning IR into a ‘lean and mean’ entity.
• With its parlous operating ratio and sluggish freight and passenger revenues, IR is reliant on institutional funds and market borrowings, apart from budgetary resources, to fund its annual capital expenditure of ₹1.5-1.6 lakh crore.
• Whether its funds constraint is a result of overstaffed manpower or other inefficiencies is a moot point.
• While rationalising the workforce, safety issues arising from the shortage of trackmen and loco pilots should not be overlooked.

Aim behind privatization

• The plan to invite private investment seems aimed at substituting imports in the area of diesel and electric locos, telecom equipment, track monitoring equipment and signalling.
• Almost three-fourths of the 5,500 Horse Power diesel-electric locomotive produced in DLW Varanasi has imported components. Companies from the world over — Europe, the US, Japan, China and South Korea — are eyeing a share in India’s railways market.
• Hopefully, the Railways will adopt the China model of ensuring local manufacturing, developing a local ecosystem for sourcing, and ensuring technology transfer within a stipulated time as it embarks on procuring locomotives through JVs.

Conclusion

• India seems to be emulating China in managing its rolling stock operations, it should be noted that China managed to ensure successful technology transfer to emerge as a global player in rail infrastructure.
• It is somewhat ironic that the push to reform production facilities comes soon after Integral Coach Factory’s indigenous production of Train 18, at under ₹100 crore a rake.
• While tendering processes have come under question, the existing technological skills of IR should not be disregarded in the push to modernise.

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Prelims Questions:

Q.1) Which of the following are the Schemes that are part of the ‘Green Revolution– Krishonnati Yojana’?
1. National Food Security Mission (NFSM)
2. Integrated Scheme on Agricultural Cooperation
3. National Mission on Oil Seeds and Oil Palm (NMOOP)
4. Krushak Assistance for Livelihood and Income Augmentation (KALIA) scheme

Which of the statements given above is/are correct?
A. 1 only
B. 2 only
C. 2 and 3 only
D. All the above

Answer: D
Mains Questions:
Q.1) Indian Railways needs to manage its transition to a PPP model carefully. Comment.