Dysfunction Junction: Railway Puts India on Slow Train to Future

Flames leap into the air, swaying toward a bank of fuel tanks at the Mughalsarai railway yard in central India, while a man with a skinny hose struggles to extinguish a blazing pool of spilled diesel.

Yards away, in an air-conditioned office, Station Manager Bijoy Kumar Shah is unperturbed. It happens from time to time when fuel lines leak, he says, reviewing some papers as billowing black smoke blotted out the sun.

Elsewhere in the vast rail yard—which marshals trains from across India—the tracks are clogged with engines and railcars. One route, equipped to handle 78 trains, had 136. The trip to the nearest city on the way to Delhi can take eight hours instead of the usual 2 ½, says Shah in the matter-of-fact tone of many who work for the country's rail system. 

Dysfunction in Indian Railways is not a surprise.

The 162-year-old system is Asia's oldest. It is the nation's economic artery, employer of more than 1.3 million people, and the government's most intractable problem. Unclogging its 65,000 kilometers of track is vital to any effort to develop the economy.

Most nations have an annual budget for government spending. India has two. One for Indian Railways, and one for everything else.

"If India is to grow at an 8 to 10 percent, or even a slower 6 to 8 percent growth path, railways will need to carry a lot more freight," said Partha Mukhopadhyay, an economist who recently examined Indian Railways as part of a government-appointed panel. "And right now it doesn't. It's almost bursting at the seams."

To take one example, economic expansion requires more power and in India, that means more coal. Hauling the coal to power stations means more rail cars.

"The capacity of railways to carry coal is totally exhausted at present," said Rakesh Mohan, an executive director at the International Monetary Fund, who was tapped by the government to lead studies of the rail system published in 2001 and 2014. "It is absolutely essential to expand the capacity." 

Prime Minister Narendra Modi, whose father made a living selling tea on a station platform, said last December that India must, "take the railways forward, and through the railways, take the country forward." Speaking at his parliamentary constituency in the city of Varanasi, about 16 kilometers across the Ganges River from Mughalsarai, Modi said the rail system should be "the backbone of our economic growth."

Last year, Modi picked Suresh Prabhakar Prabhu, an accountant and lawyer by training, to run the rail ministry. Modi and Prabhu together represent "probably the best chance for India to revitalize its railways," said Vinayak Chatterjee, chairman of Feedback Infra Private Ltd, which advises clients on construction investment.

This year the government announced a pilot program allowing private investment to overhaul 400 stations across the country, a rare incursion of the private sector into an organization that is structured as a government ministry rather than a company.

Crucially, Modi also boosted spending to revive a plan for a series of freight-only rail corridors. Contracts worth 175 billion rupees ($2.7 billion) have been finalized since last November, more than the 125 billion rupees spent in the whole of the previous eight years.

He's won powerful supporters. Google Chief Executive Officer Sundar Pichai said in September that the company will provide high speed Internet Wi-Fi connection in 400 stations across the nation. 

Indian Railways "is one of the most impressive things I have seen in my life—7,500 stations,'' said Pichai, during a meeting with Modi at Google's campus in Mountain View, California, in September. He said he remembered taking the train every six months as a student to his college in the east India city of Kharagpur and back.

Begun during British colonial rule, when the first train chugged 34-kilometers from Mumbai to Thane in the early 1850s, the sprawling network has become emblematic of Indian government structures that are at once powerful, byzantine and inefficient.

To succeed, Modi's irresistible force of change must overcome the immovable object of India's bureaucracy. And nobody does bureaucracy like Indian Railways.

It not only owns the tracks, train stations and marshalling yards, but schools, hospitals, recreation clubs and hotels for its staff. Sometimes, as in the case of Mughalsarai, entire cities grew as an extension of British rail infrastructure.

The town's old British Gymkhana Club, renovated for Indian Railways officers, suggests that the ghost of those colonial ways lingers. There's a new billiard room and a large meeting hall lined with white sofas with paisley prints, and a movie screen.

"A swimming pool is also available," said Prem Kumar, the club's manager and a railways employee. "Only for officers, not for staff.'' 

Meanwhile, the country still needs to convert about 6,000 miles of track just to have a uniform rail gauge. There are no timetables for freight cars—goods just show up when they get there—and four out of 10 lines run at 100 percent or more of capacity.

"Is it surprising that the ordinary passenger train or a goods train cannot average more than around 25 kilometers an hour?'' (16 miles per hour) said Railways Minister Prabhu in his budget speech to parliament in February. At a conference in Singapore during October, he said that part of the problem was seven decades of underinvestment.

The rail ministry has a planned 2015-16 budget of 1 trillion rupees ($15.3 billion) with almost 42 percent of that coming from the central government. Analysts who've reviewed the accounts say the bookkeeping is so opaque as to be inscrutable.

Bibek Debroy, an economist at a government think tank who's been a prominent voice for reform under Modi's administration, says the system functions on what he calls, "the ceiling method."

"You look up at the ceiling and cook up a figure," said Debroy, who headed a panel put together by the Ministry of Railways that published an extensive report this year. That's not only "for you and me—it is impossible for railway people to also figure out what is going on." 

In an interview in London last week, Prabhu said that if that were the case, "then more than $15 billion worth of investment from around the world would not have been made by investors.'' He said, though, that the railway was carrying out a major reform of its accounting system and that boosting efficiency was a continuous process. 

"We are trying to improve all the time," he said. 

In an office in New Delhi, spokesman Anil Kumar Saxena sat behind a desk piled with stacks of documents and folders, some of which reached his eye level, and described the challenge.

Each day, India needs to move more than 23 million passengers on rail lines that could run one and a half times around the world.

Spending on non-core units, such as 125 railway-funded hospitals and 168 schools, is "under examination," Saxena said. Asked about the fire at Mughalsarai, which eventually did burn out, he asked for details of the incident. He added the sheet of paper to the piles on his desk. 

Part of the difficulty in revamping the railway is that millions of impoverished Indians rely on its subsidized fares. The railways report bearing more than $3.8 billion a year in passengers and goods at below cost, including "essential commodities of mass consumption" such as fruit and vegetables.

Standing in a general-class train, bicycle rickshaw driver Sanjeev Kumar looks ready to collapse during a 25-hour journey to attend his sister-in-law's funeral in the eastern city of Howrah.

"I didn't get a seat," said Kumar, 32, his shirt streaked with sweat and his feet trodden on at every jostle of the train. About 100 people were crammed in a car designed for 40. In the stifling heat, seven men are squeezed onto a small bench, women sit on the floor and others stretch out on overhead luggage racks. Kumar's 335-rupee ticket cost him three days' earnings. 

An attempt to close 40 unprofitable railroad branch lines met with such public uproar and complaints by state governments that only 15 were shut. Low ticket prices mean that while 70 percent more passenger trains than freight trains run every day, they generate only 25 percent or so of revenue.

Rank-and-file railway workers fear that largescale privatization or foreign involvement may cost them their jobs. The All India Railwaymen's Federation union, which claims more than a million members, said in a December 2014 letter to a committee convened by the railways ministry that it "strongly opposes induction of FDI in the Indian Railways, and this will seriously disturb industrial peace.'' There hasn't been a national rail strike since 1974.

For many, working for the railway is not only a job for life, but a position of importance. Jamil Ahmad spent 36 years as a railwayman, rising to the position of a chief train inspector, the head of ticket collections.

On his final day at the age of 60, Ahmad sat in an air conditioned car on a Kalka Mail train in neatly pressed linen pants and blue dress shirt. As the train pulled into a station, he clambered down on to the platform, where a drummer and horn player waited to announce his arrival, one of them waving a fist full of rupee notes. As the music began, Ahmad was showered with flower petals, and garlands of flowers were hung round his neck.

He jerks a thumb over his shoulder toward the general-class cars. "There's a big shortage in general carriages. There isn't enough space and they come into the sleeper cars, and we can't stop them."

In the local headquarters at Mughalsarai, senior engineering official S.K. Rai takes a piece of paper to try to describe the local management structure. As he draws the cascading branches of 92 officers, he runs out of paper.

He says about 2,000 people work in Mughalsarai's long, four-story railways headquarters, from the men who deliver trays of tea to those who neatly handprint information boards in their superiors' offices.

The railway funds at least seven health facilities and three schools in the town for employees and their families, paying more than 34.2 million rupees a year for teachers and staff.

At the high school, established in 1876 by British officials and now in a dilapidated 1947 building, chunks of concrete are missing from the ceilings.

When the roof leaks, Principal C.N. Yadav always knows who to call: Indian Railways.

—With assistance from Manisha Jha in London.