Moneylife published an open letter to MR

Former Managing Director of Konkan Railway and pioneer of the Skybus Rajaram Bojji, popularly known as B Rajaram wrote an open letter to new Railway Minister Suresh Prabhu with practical suggestions and possibilities for drastically improving the Indian Railways

Rajaram Bojji or B Rajaram, inventor of the indigenous & cost-effective anti-collision device (ACD) technology and former managing director, Konkan Railway has written an open letter to Suresh Prabhu, the new Minister for Railways. In the letter, Mr Bojji has provided practical suggestion to improve the Indian Railways.

Shri Suresh Prabhu,
Minister of Railways,
New Delhi

Dear Shri Prabhu,

I am personally very happy that a person like you, with balance in thought and speech will head the tough Railway Ministry. Many will rush to advise you, but the very size of the system could overwhelm anyone, with the Railway Board making life miserable by dumping you with day to day operational problems and mishaps.

Midnight calls would likely keep you awake.

I just want to share some ideas and advice more as an old friend. Suppose I happen to be in your shoes what I would do?

Here are some brief action points. We all know that the Railways need modernization. However, our Railway Board is busy building its own individual departmental empire. Too many committees have come out with voluminous or simplistic reports. Give more money or import is the solution they come up with and grand numbers like Rs1 lakh crore. But what about viability?

In my opinion, it is irresponsible to give financially suicidal recommendations. Foreign direct investment (FDI) is glibly talked about and immediately our babus push for foreign technology based brand new workshops or manufacturing facilities, with guaranteed cash outflow but without guaranteed performance levels of output to improve revenues or safety. I suggest FDI or public-private-partnership (PPP) should always be based on the principle of assuring least financial burden on the Railways in particular and on the nation more generally.

Some examples of effective application of FDI and PPP:

1. Modernization of technology for coaches and locomotives:-

Existing manufacturing facilities all be handed over in exchange for equity stake, to modern technology providers creating a technology upgradation PPP. Every 5 years, technology modernisation cycle should be planned. Export to foreign markets, Make in India also should be a condition. Our assets, valued at current prices, be handed over and any profit the PPP makes will be shared by the Railways. Assured order quantity be committed in return for the above. The FDI has to beaccepted only from technology leaders in that area. It is not money, but technology we need. No fresh land or structures are needed. Instead of one-time technology upgradation, we will get assured technology upgradation for a longer period. We will also save on staff costs and material costs. Current staff should be offered VRS or relocation. The FDI PPP may re-engage with better salaries for deserving staff.

2. Case of keeping stations clean:

Adjust current costs (like maintenance, cleaning, managing security , parking facilities, food sales, parcel management, etc) for inflation and make it an annual guaranteed payment. Assets of the station and the land around should be valued at current market prices and treated as stake of railway in the proposed JV. Private party with sound financial standing should be invited to form PPP to provide modernization of station equipment like escalators, retiring rooms, cafeteria facilities, refurbished flooring and lighting, and with quality of service certified by a third party like Technischer Überwachungsvereina (TUV). The income stream for this JV company is the guaranteed cash inflow from Railways, the proceeds of platform access charges for non passengers, cafeteria food sales, commercial exploitation of land attached to station. This PPP JV can raise debt funding based on capital at charge for modernizing the station facilities to improve revenues. As major equity holder, Railways will share profits of the company, but will not be part of management. The company board will have a Railways representative. This step canunlock the unearned value of railway properties in and around stations and change face of the Railways.

3. Medical Organisation:

Railways has more doctors than officers running railways. The hospitals too are well developed and sit on prime properties. All the real estate should be transferred at current market value along with the equipment into a JV. With a well recognized hospital and medical healthcare management company, all Railways doctors should be offered alternate placement in the PPP JV. Similar to station service management, the JV will use this equity base to raise funds in the market, modernizes streamline and offer better quality service to railway employees. What is the assured revenue stream? Here gain take the current cash outflow on medical services and offer the same for each Zonal Railway to to set up a JV on this basis. Further commercial exploitation of lands also be allowed. Railways will hold a major share in the company and automatically get profit shares. So all medical services in railways thus will get managed by 10 or 15 PPP mode JVs. Again Railways by agreement shall not be in management. Only Board of Directors of each company will have Railways representatives. Digital networking, telemedicine and smoother workflow, shall be part of the agreementm with medical records of employees becoming accessible all over India. The company should be allowed to take outside patients too, as paying customers, including foreign patients. Medical tourism should be actively encouraged. All this, without neglecting railway employee interests.

4. Railway Colonies:

Even today, huge land space is occupied by railway colonies with sprawling bungalows. It's time we form a JV with our land and buildings valued at current market prices, with private real estate companies. For railway officers and staff, modern flats with amenities can come up, increasing capacity and providing excellent facilities by land reuse. Old and difficult to maintain bungalow culture must be done away with. More green space, biking tracks, neater and tidier roads with lighting should be built. Apart from the assured cash inflow at current costs, being incurred by the Railways, the PPP can generate additional revenue streams by building modern supermarkets, high-end entertainment and shopping malls in the land released. Funds can be easily raised because of the heavy equity base of Railway assets transferred at market rates. The rent payments of employees will go to the company. The company becomes responsible for maintenance, water supply, sanitation etc. Railways again gets share of profits. Saves staff costs and material costs as well as contractual costs of maintaining huge colonies with major concentrations of employees.

5. Track machines, track laying equipment, welding and ballasting:

Railways should not own any of the above. Transfer all related equipment to a JV with PPP . Provide assured cash flow in terms of current cash outflow for promised outputs as laid down today. Modernization of equipment, improved productivity, assured quality can be well defined and third party quality assurance certification part of deal. New line construction also is to be handled by these JVs. Profits will be shared by Railways as stakeholder. But no management participation by Railways except representation in Board of Directors of the JV company. For the entire Indian Railways, about 10 or 12 companies can be supported.

6. Electrification:

Electrification too can follow the above model by collaborating with zonal level service providers through JVs.

7. Improving speeds, throughput and safety:
  1. Get rid of fixed signals, have cab signalling, moving block system for train operations. Indigenous technology is available and has been tried for 160 kmph speed successfully. Railways should use the advanced version of ACD (Anti-Collission Device), India's own technology.
  2. Average speeds can be raised by 30 to 50% for goods and passenger trains, as well as doubling capacity.
  3. This would cost less than one-third the imported alternative technologies. And we already have rolling stock technology for 160 kmph speeds, which can be upgraded to 180 kmph.
  4. Safety needs to be assured by adopting Safety Integrity Level (SIL) of 2/3 of CENELEC certification, not by RDSO.
8. Make Zonal Railway Departments centres of responsibility and authority:

Most important step is to make zonal railway a centre of responsibility and authority. Wide area digital networking on the lines of Konkan Railways, integrating all facets of railway operations, must be implemented.

With these measures, Railways can create profit centers from current cost centers. Efficiency will improve, people will see a new face of Railways to be proud of. This would be financially sound too!”

Thanking You,

Rajaram Bojji

(Rajaram Bojji or B Rajaram as he is known popularly, is former managing director of the Konkan Railway and also inventor of ACD Technology and Skybus)etter 


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