Indian Railways, Are They Really In A Win-win Situation?

PR Log (Press Release) – Jun 07, 2007 – The Indian Railways system is not exactly in clover, as is being attempted to be shown by the mandarins of Rail Bhavan. Beginning with flaws in computerized booking system, little or no interest in rail box operations and need for raising private funds to sustain freight traffic, it is all there to be read between the lines. The computerized and Auditor general has revealed serious flaws in the Indian railways' computerized passenger reservation system in connection with an information technology audit.

The CAG report shown wasteful expenditure and in convenience caused to passengers. Also, it has shown that the system is open to manipulation and fraudulent practices like bogus bookings. It is an acknowledged fact that the Railways carries about 5.5 lakh passengers in reserved accommodation every day. The passenger reservation system facilitates booking and cancellation of train tickets from any of the 4000 terminals across the country.

The audit, whose finding should cause considerable concern to train travelers is that fares and distances are wrongly represented in the reservation system leading to charging of incorrect fares, was conducted in ten zonal railways, has indicted railways for its poor contract management practices and delays in finalizing arbitration cases which led to an avoidable payment of Rs. 13.31 crores in addition to prolonged litigation.

According to the CAG report, the electronic databases were to contain numerous deficiencies that rendered the data unreliable. In its report, the CAG has deplored the fact that Railways continue to largely rely on the hired BSNL channels, which experienced frequent and extensive failures disrupting the PRS services. This also increased the expenditure on these channels given that there were nearly 30 to50 failure incidents reported every day in the different zonal railways.

It is recalled that though Railway Board had taken decision in 2005 that all zonal railways must shift over to its own optical fiber cable network to increase communication reliability, no clear milestones or targets had been set out for the switchover, the report observed.

CAG recommended that Railways improve its network and ensure that the switchover to OFC happens soon and BSNL links are reduced to the minimum. The audit report also found that sound information technology security practices were booked on fictitious details indicating bogus or proxy bookings in advance. According to the audit report another shortcoming was that changes in the system necessitated due to changes in Railways' rules was not carried out carried out in time, resulting in convenience to the passengers as well as increasing the risk of revenue loss to the organization.

Another problem connected with the Railways- that not many takers came up for rail box operations-was highlighted by February this year. According to a report, though several companies had evinced interest in Railways containers operations segment, only two companies Kribhco and Gammon India- actually did so.

On January31, which was the last date for applying for container operating licenses, Kribhco had put in Rs 50 crores for an all India rail operations license, while Gammon India had requested for some time to put in its license amount of Rs 50 crores, Railway officials had said in confidence. The Railways had stated earlier that it would invite applications from players wanting to enter the segment for one month every year. This year however, the window had been kept open for two months- December and January to attract more companies.


With 14 companies that had acquired licenses last year, already in the waiting list to start container operations, the number of participants was in any case going to be low, according to private industry sources in the fray. With the line capacity being limited at that stage, for example in the Delhi-Mumbai sector which is the most attractive segment in export import container movement, there were ten companies vying for space in the limited line capacity of the Railways.


So, it was explained that companies would rather wait for some time to let the Indian Railways created the line capacity before committing to use it and pay up for the promised service and get it.

In April this year railways had set in motion the process of considering a special purpose vehicle (SPV) Dedicated Freight Corridor Corporation of India by inviting applications for the posts of its Managing Director and three Directors. DFFCCIL a PSU has been formed to implement the dedicated freight corridor project, the single largest infrastructure project in the country.

Two corridors-eastern and western-were estimated to cost Rs. 22,000 crore as per a survey of 2005, but now it has been pegged at Rs. 30,000 crores in view of the cost escalation. And that is a lot of money, a large chunk of which planning commission has approved in principle. But railways expect private sector to pitch in as well.