June 19, 2018

Speaking at Rail Contact 2018 – Driving Industry -Railway Partnerships, in New Delhi

Mr Allen Spore, Mr CP Sharma, Marot, distinguished ladies and gentlemen. I am delighted that in the continuing process of stakeholder consultation and engagement, Mr Ghanshyam Singh has involved the CII also to partner with the railways to engage through this Rail Contact 2018 programme, and work jointly with industry to come up with new ideas, to understand what are the issues that can help us fast forward our mission to make India one of the world’s finest and safest railway as we move towards a new India.

In fact, we have had a series of interactions with the private industry over the last three or four months. We have had a Nirman Samvad on 17th January, where we were talking to various contractors, who are working with the railways in different areas. We have had a Supplier Samvad where we engaged with 300-400 or so of the people who supply different components and equipment to Indian railways on 22nd February, both of which I personally attended.

I have had meetings both at official level, and again, at my level, with private freight terminal operators, coach manufacturers, people who are providing Wi-Fi services, signalling systems, electrification and different areas of the railway infrastructure drive.

And as Steve Jobs said, ‘Great things in business are never done by one person. They are always done by a team of people working in partnership, working as, with a joint and collective effort, working towards a common goal.’ And I am sure, today’s engagement will also come up with some good ideas, some good suggestions, some innovative thoughts, possibly certain problems that each one of you or some of you may have faced in the past, even now.

I don’t mind if you can even visualize future problems, but please do engage with the railways. Because I believe very firmly that as much as we talk to each other, as much as we understand each other, we will be able to truly bring about the metamorphosis in the way the railways as Vikram said thinks, the mindset of the railways, and the way we deliver on customer satisfaction.

Ultimately, the people of India are looking for an efficient rail transport system, both for passengers and for moving the large volume of freight that railways has the capacity and potentially has also the capacity to grow. And, as honourable Prime Minister often says, the railways will become the engine of India’s development journey. And a good, efficient, modern railway system can do wonders to the future of the Indian railways, to the future of Indian economy and lives of the people of India.

In fact, it is more energy efficient than road transport or even air transport. And with the current plans on the anvil to move towards optimum or near-100% electrification of the railways, and I am sure at some point even 100% electrification of the railways in the very near future, coupled with our plans to increase the renewable energy capacities that we procure from going forward, we believe that Indian railways by 2030 will also become a net zero emitter of carbon pollution damaging the world.

Obviously, our first step of bringing down our diesel consumption has huge economic benefits for the country and for the railways. We will be saving huge amounts of money, at least a couple of billion dollars of annual savings on diesel alone, hugely reducing the carbon emissions and pollutants that the railways directly or indirectly gives out. But also, simultaneously, seeing how we can use the large tracts of land that we have to set up solar systems.

In fact, I often tell friends from business and industry that every square inch that you have you must try and set up a renewable energy module, maybe a solar plant or a wind plant, if not for any other joy. Of course, with today’s prices which the sagacious leadership of Mr Narendra Modi through a very transparent and efficient bidding mechanism has been brought down to below thermal coal power levels, probably for the first time in history.

It makes very good economic sense to be generating renewable power. But, more importantly, you will actually save your land from encroachment, and the railways is suffering huge amounts of land that we have lost to encroachment. So I have been persuading and I think the same would go for BHEL and all our PSUs, if for no other reason, irrespective of our savings in both electricity bills and our emissions, we will actually be protecting the government property and our lands and so can you. And whenever you require that piece of land you can shift your equipment at a very nominal cost and very comfortably and easily. And the transmission line that you would have set up to evacuate the power can be used to actually receive the power into your manufacturing or into the new use of land that you will now introduce.

So, it really makes a lot of economic sense, and nobody may have any misunderstanding that we have some fetish for renewable energy or some fetish for trying to save our planet. We are really doing it for the children of tomorrow. I am sure none of these children want to inherit a country like the one we inherited on this dais or many of us in our age group. I am sure we would like to leave behind a better planet than the one we got, and I am sure all of us engage with the railways also understand what kind of a legacy we received in 2014 when it came to the railways.

And I do hope Ghanshyamji, you, your team and I are never accused of leaving behind in a similar way in a very lousy legacy for the next team whenever in the future they come up. Certainly, I do hope not in a very near future, not in a hurry. And the people of India are smart, they know what is good for them. They appreciate the game changing reform, the huge amount of effort to impact the lives of 1.3 billion people that have gone in over the last few years, the effort to make India an honest country, the effort to bring about change in the way we work, the change we do business.

But if one looks at the legacy that we inherited, we were battling lack of investments. I think even the last year 2013-14, before we came in, the total investment in the capital infrastructure of railways was slated to be about 46,000 crores. This year, we are looking at 1,41,000 crores. That’s the scale, the massive growth that we have seen over the last five years.

The capacity constraints – I don’t know how many of you are aware of the statistics, and I was seeing the CII background paper. I would urge you to correct the statistics. The reality is that in the last 64 years, freight loading has increased by 1344% on the Indian railways. Passenger travel, in terms of passenger kilometres travel has increased by 1642%.

That’s the scale of demand over the last ….. that we have seen growing – 13 times in freight, 16 times in passenger traffic and what has been the capacity growth? If you look at route kilometres, we only added 23% route kilometres in 64 years. There have been some efforts to double or triple lines, but I feel ashamed to share with you that up until 2014 there was not even an effort or a plan to ensure that the golden quadrilateral or the laterals, the main carrying areas, the ABC routes as we call them were also not having double lines or lines going up and down across the Indian railways.

Actually, to this date, connections to South India are still not completely having a double line. I think we have fast tracked the doubling at least of all these lines and, hopefully, the very-very near future the last 200 odd kilometres will be done and you will actually after 70 years of independence have a situation that between Mumbai and Chennai, or Mumbai and Hyderabad or Bangalore, you will be able to go up and down on different tracks. And when you double a line, you don’t just double the capacity, mathematically if anybody can work out, but it would be at least 4 times plus when you look at the maths of two lines instead of one.

We had huge technology issues. There was very little effort to truly engage with modern technology. चलता है! आखिर रोज़ 22,000 गाड़ियाँ चलती हैं तो सिस्टम तो चल ही रहा होगा, इसलिए चलते रहने दो|

But I don’t think there was any effort to see what transformation can happen if we engage with technology. There was very little effort to see how we can improve the security and safety of our passengers using technology. There was very little effort to see what technology can do on electrification, on signaling. In fact, we were not even ready to engage with modern technology.

And you saw that when we launched the bullet train, how some political opponents were willing to even discard modern technology coming to this country to serve the passengers and their interests of better and safer and comfortable travel. It’s almost like the rehash of the 1969 story when the Rajdhani was first introduced in India, and I am given to understand the very chairman of the railway board opposed the introduction of Rajdhani.

And that has continued, I mean after the Rajdhani, I dare say we have hardly had any significant technological fast tracking of new technologies of faster rail travel. I mean we did bring in a Duronto or two, or a few trains, but not any significant jump in technology levels. What we are bringing in in terms of the bullet train, the Shinkansen, is also something that was introduced in the year of my birth in Japan. And I am no young person anymore.

Of course, we don’t have the privilege which some political leaders have of being called a young leader all through their life, even when they are close to 50.

And this huge amount of congestion in the system, low speeds. I mean, the passenger trains today across the country are still at, what? 43-44 km per hour speed at an average! Freight trains even worse – 23-24 km per hour at an average! Very miniscule investment by the private sector because you were never sure what will happen tomorrow, whether you will really get consistent business or no.

And, somehow over the years, the railway budget became a tool to make a political statement. So, you had hundreds of new projects being announced, new lines being announced, new trains being announced, irrespective of the fact that there was no money to back it up, irrespective of the fact that there was very little chance of getting the land to set up these lines, many of these lines. And today we are saddled with a situation that there are projects which started in 1975, which have not even probably crossed 30 or 40% execution – 43 years later.

And all of this means these projects are going to get costlier and costlier with mounting cost over runs and time over runs, just to keep each project live we are giving small allocations of money to 450 projects. So, you are in a way wasting your money. The speed at which you invest is never going to catch up with the cost over runs, making almost all of these projects unviable, adding to the stress on the system. Overloading the available capacity, and in that process making the entire railway story unviable and then complaining about high operating ratio and complaining about the fact that passenger travel is very uncomfortable, overloaded trains, lack of adequate infrastructure, not enough capital to invest.

And I must confess, I very seriously believe that it is that political – for ensuring that I don’t use a very harsh word – I will just call it a misdemeanor. But it was that narrow political vision that caused the distress that many sections of the Indian railways today is suffering. After all, a good sensible business manager sees what is in his pocket, prioritizes what is important, and focuses on implementing what is important, what will give faster payback, what will be efficient spending of scarce resources. And we all know that India has always had scarcity of adequate capital or low-cost capital to create the huge demand of infrastructure in the country.

And this government has had the decisive leadership to not only do away with a populist measure like the railway budget, but also not announce populist projects, but focus on what is truly essential and what can give you the fastest payback for every rupee that you spend.

The CAPEX over the last five years – four years and the current year – would be almost two and a half times of the corresponding previous period. In terms of statistics, the line commissioning will be 59% higher in this period, rail renewal nearly 50% higher. In fact, from a usual 200 to 225 kilometers being done every month, when we move the needle to make up for the huge backlog that we had inherited, I am happy to share with you that come November-December, 2017, we had been able to ramp it up to 476 kilometers of rail renewal, track renewal every month.

I think in January, it went up to some 576 kilometers, in February it even went up further to 640 odd kilometers – from 220-225 regularly. We were almost at 3 times in a span of, we took that decision in September, so we are talking of 4 or 5 months from taking that decision to speed up rail renewal and make travel safer for all of you by almost three times. That’s the capacity that we have in the railways. The bottleneck is not of our ability to perform, the bottleneck is our self-confidence and our willingness to take on bigger and bolder challenges.

And we ended the year doing some 4400 odd kilometers of track renewal in the last 12 months, largely coming out of the last 5-6 months of focused effort to make this happen. Look at electrification, led by Mr Ghanshyam Singh, whereas we have done some 608 or 618 kilometers in 2013-14 of electrification, last year we moved the needle and we only did 4,087 kilometers, not much, 7 times more. I do hope this year will be even better than that.

And it’s all doable. It’s all possible. You all know what economies of scale does to our business. I believe we have already been able to reduce this cost of electrification per kilometer somewhat and he mentioned, Mr Ghanshyam Singh has mentioned a very ambitious target. Of course, speaking of ambitious targets today, I was reading about the UDAY programme that was started in November 2015, when I was the Power Minister. It’s only two years since then and it was a voluntary programme, so it took us some effort to get all the states on board, so I remember it took almost a year and a half to get all the states on board.

So, many states have had the benefit of two years of UDAY, some have had one and half years, some have had only one year, and by March 2018, the losses of the distribution of the distribution companies came down from over 60,000 crores a year to now 17,000 crores. That’s been the game changing difference, thanks to the UDAY programme – something which almost every media house,  the regulators, I will not name the regulators for who they were but most people would remember and know the amount of criticism that programme had. And even today, while writing about this success, there is so much pain to acknowledge that there has been a 75%-60%-70% deduction in the losses that the person writing the article will still add ‘but they failed to meet the very stringent targets on AT&C losses’. Obviously, they were stringent targets, I just never give simple targets to anybody.

After all,  when we picked up the 100 GW of solar energy target by 2022 we were at 2500 GW or 2500 MW – 2.5 GW. Our ambition was not small, it was 40 times growth in 7 years. But unless you aim for the moon, you are not even going to get half way there. So unless I keep aggressive targets, I don’t think we would have achieved 4000 kilometers of electrification or 4400 kilometers of rail renewal. But I would rather keep a very-very ambitious and bold target and underperform a little bit, than keep a target of 2%-5% growth and then go to the public and say, look we have crossed our target. That’s the typical PSU culture or the typical way governments in the past used to be. Mr Modi doesn’t accept that. He wants you to be bold. He wants you to work for it.

And I do hope our railway officials are feeling the pain of working 24/7. And Mr Modi never tells you to work, even though Amit Tandon may, or who? Ganguly or somebody may make a video or a comedy show out of it. He first works himself and he assures you that if you will work 20 hours a day, I will work 21 hours. But I will not let this country down. And that is what truly inspirational leadership is all about.

In fact, there is always a feedback or two which excites you, which gives you a little bit of satisfaction. We embarked on a mission to – I am giving a simple example just to reflect that how small things add up to the big picture – we started this drive that we will not allow anybody to take tips or overcharge our consumers, when you are buying any cutlets or omelette on the train. And, by the way, we are working to improve that quality, give us a little more time.

So, I have a Facebook post of a gentleman called Sumit Vajpayee yesterday, where he was travelling on the Gwalior-Bhopal Shatabdi. And after the meal, and fortunately, he has not criticized the meal, somebody came carrying a tray soliciting tips, and we have completely banned it. In fact, everybody has on their uniform, ‘no tips please.’ Probably, many people give tips out of embarrassment, rich people or the relatively well-off sections of the society feel ki if somebody else is giving. And, you know, people who are used to raising funds knows or a person who does an auction knows that very often you have to have 2-3 people in the crowd who will first give the first two or three donations to embarrass the rest of the people to make sure they also contribute. Or in an auction, you need that one or two people to start that auction so that others feel there must be something in it, this painting must be good even though I don’t understand what it shows.

So, everybody started giving tips.  This gentleman tweeted about it. And I am Sumit Vajpayee that “I tweeted about this, within moments the issue was escalated and a supervisor came and asked the staff to return all those tips.” It gives me a lot of satisfaction. Maybe a small thing, but it reflects the changing way we are dealing with customers, we are dealing with problems on hand, and the success mantra for the public centre or for the private sector is the same.

I have always believed and not after I became a Minister, well before that, that a success or a failure of an organisation is not related to its ownership, doesn’t matter who owns the shares or the ownership of that company or organisation or institution. It’s only vision and leadership that will determine the fate of any organisation or success and failure of any effort that one puts in. And I think that is the change that Prime Minister Modi’s leadership has brought to the nation and that is the change we are trying to bring into all our institutions, both in the government and in some sense, also in the private sector in terms of how we work, how all of us can help to make India a better place to do business in, a honest place to do business in.

After all, we can’t achieve success unless you all participate in this story. If Sumit Vajpayee hadn’t tweeted about it, I would never know that there was a problem on that train and unless I know there is a problem, you will appreciate we can’t solve it. It’s something like punctuality, I don’t know if you are aware, over so many years, the data of a train arriving or leaving at a station was manually entered at each point. Do I need to say anymore about it?

And every time I would see on the one hand we have customers who are screaming mad about delayed trains, but every time I talk to my people in the railways, the statistics show a different picture – 85%-90%. Punctuality if it’s 90%, then why the hell is every train 8 hours late? I don’t mean every train, somebody will pick up on that point and that’s headline news. Good news is never exciting. It’s only bad news which gives you a sensation.

So, we got down to doing a root cause analysis which has been our typical effort to resolve problem, and we found it’s somewhat like when you go to a doctor, and you hide your illness, he’s never going to be able to cure you. So as a first step, we decided that we will block all the false data and at every interchange point got a data logger to give the accurate data. And lo and behold, you straightaway saw a 15% drop overnight.

So, 31st March and 1st April, the data, and not an April  Fool’s day, but the reality coming out a drop of 15%, because all that fake data got out of the system and now we know what the damn problem is. Last nine days, I have reviewed 8 zones personally on punctuality, on cleanliness and on catering – only these 3 issues. All my technical reviews and safety and all have already happened much earlier. We have of course discussed these issues earlier, but in the changed context of real data, the pressure on the system has now come in to perform. And to the extent that I get a message yesterday that I had done a review in Chennai of the Southern Railway last Thursday, and within two days the punctuality in that Southern zone increased by 10%, that’s the south zone, Southern Railway – which was the one I did in Chennai, Southern Railway. South Central I did in Secunderabad on Friday, and then I did three zones on Saturday, and I did one zone yesterday and I am doing one zone as soon as I go from here.

I mean some people may find it’s so silly. I must be a free man. I have no work to do that I am sitting with each zone and discussing traffic blocks, speed restrictions, temporary speed restrictions, permanent speed restrictions, infra projects, delays because of signal failure, asset failure. My god, at the end of the day, I will forget my chartered accountancy, probably, land up trying to get an engineering degree. But do I have a choice? Does my customer – and we are going to celebrate Gandhiji’s 150th birth anniversary soon, 2nd October onwards – does my customer not deserve better?

And I think if we all collectively work in that spirit, Umesh if you don’t mind, I have met with all your wagon manufacturers. You all assured me that there will be a significant push in production. I need 100,000 wagons in the next 5 years – 100,000, I said it to all of you. What do I get? December – 486 wagons! Pardon me for this, but I am saying this because I want all of you to gear up. December – 486 wagons, January – 534 wagons, February – 455 wagons, of course, if you were a PSU, you would  have told me it’s 28 days working, not 31, so it justifies. March – 452, even less than February.

I have yet to see any organisations which in March underperform over February. I am sure BHEL will be doing much better than that. April, and you will be shocked – 334 wagons being supplied, May – 440, and lo and behold, when I ask them what are they doing to increase. They say, don’t worry, in June you will get thousand, July 1200 and August 1300, and if you don’t deliver, what should be my option now? We always talk Indian manufacturers should get protection. There is not enough business. What do I do, I need a 100,000 wagons to meet the needs of India. We have a dedicated freight corridor coming in which is going to give me a 30% additional capacity on freight. I am looking at electrification. I am looking at modern signaling and adding another 40-50% capacity through efficiency through all of these benefits.

But has Indian industry geared up to meet those challenges? I want to bid out 22,000 wagons, I am holding back because I have 18,000 wagons yet to be delivered. I am just taking this as an example, please do not mind. Take it in the same spirit as I take the tips and the overcharging. We have got to do something about it. Or would you rather, and I am opening this up for private sector now. I have already done that. You will have private sector importing these wagons. Then don’t come running to me in my temporary role as a Finance Minister that now increase the import duty on wagons.

We will have to, all of us, also gear up to see what and how we can do better. I am giving LC payments, Letter of Credits. I doubt very much if any of you have ever imagined you would get a Letter of Credit for your supplies. I am willing to give Letter of Credits for supplies. I am willing to give larger composite contracts, either turnkey contracts, like we are doing in electrification. I am willing to give assured supply for three or five years.

You ask, we are open to ideas. Tell us what are your difficulties, we will resolve them. If there is corruption anywhere in the system, escalate it straight at my office. If I am the source of that problem, go to my Prime Minister. But we need to change the way things were working. And I appeal to all of you, you are all stakeholders of the Indian railways, and in fact, beyond that you are all citizens of this great motherland of ours. Does this country, does the youth of this country, do the poor of this country deserve any better? Is increasing railway fares the solution to the problem or improving efficiency the solution?

You will have editorials written that this government did not increase fares for two years or whatever. Very easy for a person to write that railways should recover the cost of passenger fare and increase passenger fares. How can I increase passenger fares for the inefficiency which I am working on? Let me give you a good experience, let me give you a delightful journey, I am sure the passengers will be willing to pay for it. I introduced the air conditioned coaches in Mumbai Suburban, nobody complained when they had to pay 30-40% more. It was a comfortable journey.  But when you pack us in like.. and I have travelled 8 years in that same situation in Mumbai Suburban Railway, then obviously people are going to get agitated if you increase the fares.

So all of us have to collectively see what we can do to improve efficiencies, to improve the working of the railways. I have tried that RDSO improves, their timelines have reduced from30 months to 6 months. I have put every item in the public domain. If any RDSO issue is there, I have said immediately escalate it. I believe transparency can do wonders in our own efficiency. But if there are issues, I want you to escalate it, I want you to raise your voice.

And actually, contractors, suppliers gave us suggestions, on which many-many policy decisions are now being taken in the railways.

India is changing. The mood of the nation is changing. The working of the railways is changing. I would invite all of you to be a part of this change. Reflect on what each one of us can do to make the railways better, give us your idea, share your ideas. Tell us have you overdesigned a coupler, are our springs the best that we can have, could be use better paint on our rail lines so that they don’t get corroded? What are the new technological innovations, even for a simple things like housekeeping may be? How can we do CCTV cameras better in every coach, on every station? What are the constraints that you face in your working with the railways?

Like this station development programme was tottering, we had stakeholder consultations, two rounds with all of them in as big a packed room as this and we realised four issues. We have set out to solve all four of them. They said a 45-year lease is adequate. They said fine, we will make it a 99-year lease. They pointed out that mortgage of the property is not permitted, so we can’t get cash flow. We are going to allow mortgage, even sub-mortgage if somebody buys from you. Sub-leasing is going to be allowed.

They said we are very worried to work on the railway side of it, on the station side. We are happy to work outside the station. We said fine, we will give out EPC contracts on the railway side and do the work and monitor it ourselves, so we will give you a clear title and easy to work without being worried about what’s happening on the railway station side.

There is a solution to almost everything. I was asking Sobtiji, so he said July-August they will roll out their electric locomotive. I am willing to give you a 10-year order. You make as many as you can, tell us what you can do, do it efficiently, do it in a cost-effective manner. I was in fact telling Ghanshyam Singh ji to talk to you, can you roll out your electric engines faster? I am happy to look at faster engines, certainly do give me a benefit on the pricing with increased scale and speed.

So we had an opportunity where truly, we can transform the way we work in the railways. We can make this one of the best railways in the world. We can improve the quality standards of the products that we make, of the products that we use, of the services that we give.

I invite all of you to be a part of this change, to be a part of this humble effort to at least leave behind in the footprints of time a better legacy than the one we inherited 4 years ago.

Thank you very much ladies and gentlemen.

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