Stemming the rot in the railway

The government is poised to hike railway fare by around 8.0 per cent. This is apparently another move to link the railway with market mechanism. Proposal to hike the rail fair every year is also a part of this move under the market-oriented economic policy which is driven by the neo-liberal ideology.
The logic put forward to justify the proposed hike in rail fare is clearly in line with pro-market approach. It has already been argued that the continuous losses of the Bangladesh Railway (BR) need to be contained. At present, the railway is suffering a loss of Tk 9.0 billion annually.  Another argument is that rail fare was not increased for a long period of time in the past to adjust increased operational costs. So, loss of the railway mounted and accumulated. In order to avoid such loss accumulation, the government has to increase the fare annually. The last hike took place three years back.
But the arguments are not well substantiated.  Careful analyses are required to understand the reasons behind the loss of the railway. It needs to be pointed out that the operation of the railway does not follow the process of market. Thus, resorting only to fare hike will eventually be counter-productive.
RAMPANT IRREGULARITIES: There are several factors contributing to the loss of the railway decade after decade. Like in many other state-owned entities, irregularities and corruption are rampant in the railway. Poor governance makes the rail service inefficient and hazardous. From the purchase of machineries to sale of tickets, different types of irregularities and corruption are inbuilt and unavoidable.  These are reflected in the huge number of unsettled audit objections.
According to the latest annual report of BR, 452 audit objections, which involved Tk 1.87 billion, were settled in the last fiscal year (FY15). But the number of unsettled audit objections stood at 14,509, worth Tk 282.69 billion, at the end of June, 2015.  The share of the ministry of railway was 17 per cent of the unsettled audit objections against 55 ministries and divisions which numbered 853,314 involving Tk 6,156.06 billion.
Most of the audit observations or objections pointed out series of irregularities and non-compliances of railway expenditures. For instance, the Office of the Comptroller and Auditor General (OCAG), the Supreme Audit Institution (SAI) of the country, ordered an issue- based audit on land management and recovery of license fees for the usages of the railway land. The audit, covering three financial years (FY08-FY10), was conducted by the Railway Audit Directorate under the OCAG. The audit report has 13 observations involving Tk 1.55 billion. Major observations include non-recovery of compensation from different government organisations for removal of establishments, non-realisation of license fees for using land of railway, and illegal occupation of railway lands. Due to these reasons, there was a huge loss of government revenues. The issue-based audit report also identified several reasons for such irregularities. These include: non-compliance of government orders by the railway administration, failure to evacuate the illegal occupants, non-observance of rules and regulations regarding realisation of license fees and lack of proper steps for realisation of license fees.
Another special audit report on rehabilitation of mainline sections (East and West zone) of BR identified several irregularities on purchase and procurement of  different development works. The report, which covered the period of 2001-2007, made 23 observations involving Tk 741.5 million as loss. The audit found that railway officials and staffs awarded contracts to different firms and individuals at over-priced rates.    
There is little need to elaborate on audit reports where more irregularities and corruption were unveiled. The departmental cases and disciplinary actions were but the tip of the iceberg of irregularities in the railway. In the last fiscal year, there were 763 accumulated divisional cases. Of these, 497 cases were dissolved by exempting 101 and penalising 396 officials and staffs. But, not a single one was suspended or removed from the service.   
SUPPLY-SIDE CONSTRAINTS: If the railway needs to be operated on the basis of free market principle, as argued by the government and many others, then it needs to address the fundamental aspects of market mechanism. Currently there is a huge demand-supply mismatch in the rail service. While people want to travel by train, there is not enough railcars to carry the passengers.
A glaring example of the demand-supply mismatch is the mad rush for rail tickets during the Eid time. Even after spending the whole night in the station, many passengers fail to avail their tickets due to the shortage of supply. The poor capacity of the railway to meet the passengers' demand also reflects the urgent need of modernisation and upgradation of rail operation.
In fact, the demand for rail is always there for both passenger and cargo services. But inadequate number of rail coaches, lack of double and triple rail tracks, shutting down over 100 stations due to lack of manpower and failure to revise routes with appropriate expansion create a high supply-side constraints. Overall, there is a bad shape of existing services which is simply harassment to the passengers. Without addressing all these supply-side bottlenecks properly, rush to hike the fare is an unfair move.
However, the railway has adopted a 20-year master plan and 235 projects have  been taken up under the plan.  Currently, the BR is implementing 39 projects with a total cost of Tk 352.41 billion. Some projects are scheduled to be completed by 2016 while some others by 2017. But, in many cases, progress rate of implementation is slow.
WHAT TO DO: Enforcing good governance is a must for revamping the overall rail system. The government has no option but to curb irregularities and corruption for smooth functioning of the railway.  
There is a suggestion to privatise the railway which is not an option at present or even in the mid-term. Rather a public-private partnership can be tried. Constructing one kilometre rail line is less costly than one kilometre of road while return on investment is usually higher on railway which provides environment-friendly, safe and smooth journey.
Expansion of rail network and revival of the already abandoned links are two important tasks. By recovering illegally occupied land and assets, railway can increase its resources. Finally, the expansion and modernisation plan of the railway needs to be linked with long-term regional connectivity.  
In the development budget for the current fiscal year (FY16), Tk 56.50 billion has been allocated for the railway while total budgetary allocation (both development and revenue) for railway is Tk 77.17 billion. The allocation is not small at all. What is important is effective implementation of the budget.  
Moreover, these actions need strong support from other related ministries and bodies under a comprehensive development plan.  The rail ministry alone can do little except hike the fare.
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