23 February 2016 10:53:36 IST

A management and technology professional with 17 years of experience at Big-4 business consulting firms, and seven years of experience in high-technology manufacturing, Rajkamal Rao is a results-driven strategy expert. A US citizen with OCI (Overseas Citizen of India) privileges that allow him to live and work in India, he divides his time between the two countries. Rao heads Rao Advisors, a firm that counsels students aspiring to study in the United States on ways to maximise their return on investment. He lives with his wife and son in Texas. Rao has been a columnist for from the year the website was launched, in 2015, and writes regularly for BusinessLine as well. Twitter: @rajkamalrao

Call the NFIR’s bluff

Members of the National Federation of Indian Railwaymen holding a rally in New Delhi in 2011

The Federation’s plan to go on strike from April 11 will inconvenience people who can least afford it

The folks who operate the nuts and bolts of the Indian Railways seem stuck in the 1930s. Leaders of the National Federation of Indian Railwaymen (NFIR), in calling for a nationwide strike effective April 11, appear as though they just landed after the Dandi march.

One of Gandhiji’s greatest legacies — of peaceful non-violent strikes that crippled life — was used for a specific, national objective. He mobilised every Indian to join hands and protest the illegal occupation of our country by a foreign power. By tapping the patriotic fervour inherent in each individual, he was able to unite men and women of all religions, races and age, against the atrocities of a common enemy.

The current NFIR strike, however — as most other public sector labour strifes in the past — pits its elite members against the rest of their country’s citizens. For many southern states, April 11 is peak travel season for children getting off after a long school year. The impact to the travelling public of this strike could not be more devastating — which is why the NFIR has planned its protest at this opportune moment, levying damage on the people who can least afford it. What kind of selfless public servants are these?

A coveted job

A job in the Indian Railways has been one of the most coveted for millions of Indians since Independence. As a monopoly that is wholly owned by the Indian government, the department’s employees have little to fear — their jobs are secure; compensation packages are cushy, some of the best in government; and benefits — including subsidised housing, education assistance and travel perks — are enviable.

Unlike companies in the private economy, the department is immune to cost pressures and has little incentive to re-engineer to become more efficient. If costs go up, the Railways simply increases fares — or if this is politically not feasible, draws on the central budget.

Number crunching

Take a look at the cost structure of the Indian Railways. The huge fixed costs — of laying track and building train stations — were largely borne by the British. In 1929, the Railways had 41,000 miles of track. Today, it has 71,000 miles, with most of the new tracks duplicating existing lines. The main fixed costs — of locomotives, wagons, coaches, IT and signalling systems — are large, but income from freight and passenger fares is not trivial.

In 2014–2015, the Railways had revenues of ₹163,400 crore (nearly $24 billion) — no small change.

So, where does all this money go to?

The truth is that the Railway Ministry is a bureaucratic morass of zones, divisions and offices. There are a total of 69 administrative divisions across the country, each headed by a Divisional Railway Manager (DRM). Just exactly what do people in these offices do when all the action is out in the field? It is small wonder that a major expense item is the department’s variable cost, jaw-dropping compensation packages and benefits for its 1.40 million employees.

Let’s do the math

A Train Ticket Examiner in a job that doesn’t need strong skills or competence can make nearly ₹35,000 a month. Most jobs pay a lot higher. Assume, for the sake of argument, that the average employee compensation is ₹70,000 a month. This means that the annual payroll is nearly ₹117,600 crore, which is 72 per cent of total revenues!

There is no industry on earth that can sustain such a high-cost structure, except when you are a government monopoly. Which is why many members of the travelling public will be glad to trade their jobs for a position in the Indian Railways.

The demands

So what is the union asking for in its list of eleven demands? Put simply, the union wants more and a lot more of the same.

Point number 4 : Insists that the Railways must not privatise, outsource or contract out any function that is currently being performed by Railways personnel.

Point number 5 : Says FDI in Railways will not be tolerated.

Point number 6 : Says Railways has to hire more people, including converting current contractors to regular Railways employees.

Point number 10 : Demands that no reforms to its bloated bureaucracy be allowed, especially if existing benefits to workers are impacted.

What kind of a la-la land is the NFIR living in? The majority of the passengers who pay hefty fares, especially upper-class fares, don’t have similar protections in their workplaces. Why should they pay even more, so that the lives of NFIR members can get cushier? Have the leaders of NFIR seen how modern, safe and comfortable trains are in other countries in the G-20? Shouldn’t we embrace foreign technology and investment so we can have better stock rolling on our tracks, rather than sticking to wagons designed in the 1950s to serve a bloated NFIR membership?

What Reagan did

The approach of President Ronald Reagan in 1981 is an inspiring story here. Months after taking office, he confronted a powerful union — the Professional Air Traffic Controllers Organisation (PATCO) — which was about to launch an illegal strike demanding better worker conditions. The strike was illegal because US law prohibits strikes by government employees that can hurt the lives of ordinary Americans.

Reagan threatened that if Patco members went on strike, he would fire them and replace them with military controllers. Only 1,600 of the 13,000 obeyed and showed up for work. When the others called Reagan’s bluff, he fired the 11,345 striking air traffic controllers and banned them from government service for life. It took the Federal Aviation Administration (FAA) nearly 10 years to come back to normal staffing levels but there has never been a federal government strike since.

Reagan’s approach is, of course, impractical in the NFIR case because India doesn’t have a contingency staff to run the rail network in the case of a strike. But the PM and the Railway Minister should take a very heavy hand in the matter. They should make it clear that the country will not tolerate NFIR’s actions and that the government will impose severe penalties — short of termination — if NFIR members do strike.

In life, actions will always have consequences. NFIR should be made to learn this the hard way — and the government can rest assured that the majority of the public will support its strong stance.

So, go ahead and call the NFIR’s bluff. The country will be better off as a result.

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