Friday, 10 September, 2010

Panel recommends Railways procurement overhaul

BHOPAL : Is the Lucknow-based Railways Research Standards and Design Organisation (RDSO) on the verge of losing its decades-old stranglehold on the corruption-ridden licensing of Railways suppliers at last? If the railways minister Miss Mamata Banerjee implements the key recommendations of an 8-member senior committee which was appointed on the minister’s own insistence, this momentous change could happen.

Implementation of the recommendations will not just re-calibrate RDSO’s functioning, but transform Railways procurement entirely, that runs into over Rs. 25,000 crore annually.

The Statesman has accessed the committee’s report which recommends that supplier approval at RDSO be ‘substantially reduced’ and decentralised to Production Units and Zonal Railways, with inspection of stores delegated to a different agency like RITES or Zonal Railways. The committee has observed that “the cumbersome process being followed by RDSO delays the vendor development work and also deters the good suppliers from coming to the Railways. Railways thus continue with too few suppliers for critical items” and make purchases from original equipment manufacturers at “exorbitant prices.”

The report notes that “it is not good practice to entrust all three works namely framing technical specifications, vendor approval, and inspection of stores to single agency” and that ‘RDSO should focus on its prime activities, i.e. Research, Design, Standardisation, and Development.’ The Statesman’s investigations show that though there is corruption at every level of Railways procurement, it is in supplier approvals, conducted primarily at RDSO and Production Units, where the seed is planted and the major game of kickbacks, involving top Railways officers, is played.

Along with the senior-most officers of the respective user departments, RDSO has been restricting competition and approving favoured suppliers. These select suppliers have doctored prices and gone on a fleecing spree throughout Railways. According to estimates, Indian Railways have lost at least Rs. 50,000 crore due to over-pricing in the past decade, largely due to RDSO’s non-transparent and non-competitive system of approvals.

In December 2009, Ms. Banerjee informed the Chairman, Railway Board, about her desire to create a ‘monitoring mechanism’ at the Board for ‘proper oversight of vendor approval work being done at RDSO.’ The Chairman constituted an 8-member committee of senior officers to investigate RDSO’s functioning. According to sources, visiting RDSO early this year, the committee found the research body involved in approving suppliers despite its having no such mandate, and limited technical manpower to do so.

Sources within Rail Bhavan have disclosed that while both the Chairman and other Board Members were largely in agreement with the recommendations of the committee, ex-Member, Mechanical, Mr Praveen Kumar was not impressed. In consultation with current Bangalore DRM Mr S Mani, Mr. Kumar is believed to have commented against the recommendations and delayed their progression. Soon after this newspaper reported that the recommendations still languished with the present Member, Mechanical, Mr Sanjiv Handa, the file is believed to have been forwarded to officials who man the Minister’s cell. RDSO has for long put its primary responsibility of Research aside, and become the centre of Railways corruption.

Although both CVC and CAG have criticised the RDSO’s approval system and its rampant corruption, the committee report represents the first time an internal decision has been made to address the problem. While the recommendations await implementation, corruption in Railways procurement continues apace.

Ignoring safety, breeding insecurity

It is a burning issue within Indian Railways, amongst conscientious senior officers who know about what is happening and all that could ~ and should ~ have been done to avert the spate of track tragedies that have cost thousands of lives over the past few years. Yet, apart from lip-service to the need for an anti-collision device (ACD), usually in the context of a cry in favour of the installation of a ruinously expensive Train Protection Warning System (TPWS) after every train accident, the technologies are confused.

And people remain unaware of our indigenously developed, cheaper and superior technology infused ACD, the Raksha Kavach, the introduction of which has been repeatedly stalled. Perhaps Miss Mamata Banerjee need to be reminded of her own commitment to an ACD, and there's none better placed to do so than Mr Bojji Rajaram, a retired Indian Railways official who served as MD Konkan Railway Corporation and as Fellow of the Indian National Academy of Engineering. He has been instrumental in devising revolutionary low-cost engineering technologies like the Raksha Kavach and the Sky Bus Metro, amongst others. Mr Rajaram spoke to Shiv Karan Singh about how Railways bureaucracy has compromised passenger safety.

Q: News reports say the Railways will be installing TPWS across various zones, limiting the indigenous, non-signal ACD to the southern region. Another official says the ACD has been disowned entirely. Is Railway safety on the right track?

A: A joke is being played on the unsuspecting public by the Railway Board by saying TPWS will protect against collisions. With TPWS, the station alone, till the signal is red, is partially protected. The block sections remain unprotected. TPWS does not give any protection on tracks between stations. Actually, there is no technology in the world which can automatically prevent the collision of an oncoming train with a derailed train on the same track except ACD. Only 10 per cent of the Railway network gets partially protected with the inferior performing system that is TPWS and it costs a ton. The ACD network, when fully implemented, will protect 100 per cent of the network, including stations, junctions, and block sections inclusive of gates and vulnerable locations and even when the signal is not red. And will cost less than 15 per cent of what TPWS costs. ACD is the most economical accident prevention system in the world. TPWS is a grand failure when signal colour is green by signaling mistakes, which Railway Board knows happens; it is discussed in confidential meetings with GMs. Jnaneswari or Ghaisal types of accidents cannot be prevented by spending enormous amounts of unnecessary money on TPWS. The news reports you speak of, if true, are insulting the Indian public's intelligence and are a blot on our nation.

Q: Are you saying the Railways is giving preference to expensive, limited foreign technologies rather than cheaper indigenous technology?

A: The amount of strategic thinking to ensure that ACDs are prevented from being employed is mind-boggling! Honest officials on higher rungs don't have that much time to go into details of a case but in the process those with evil designs have a field day, pushing files and notes to their advantage. In this case, it has been the pushing of foreign technologies, even if outdated. The same thing happened with Metro Rail as is happening for ACDs.

Q: Please define the ACD technology that you helped innovate?

A: Anti-collision non-signal devices are intelligent rugged microprocessors to self determine location and status when mobile on a railway while static ACDs monitor vulnerable locations like stations, gates, slopes, bridges. The ACD devices securely inter communicate within the range of distance required to reduce speeds of moving units to assure safety against collisions or accidents, keeping a log of train speeds and status for any derailment-type accidents like a black box. Independent of signals and human inputs, ACDs create an ever present Raksha Kavach, a protective bubble.

Q: How does ACD technology compare to other safety technologies such as Vigilance Control Device (VCD) and TPWS?

A: VCD is primitive; an inspectorial mentality and authoritarian approach that keeps disturbing the driver's attention by asking him if he is vigilant and asking him to confirm the same. It is, in my opinion, a nuisance to a good driver. TPWS is a red signal fixation. It is too limited an application and cannot meet our requirement of collision protection in all track areas. Dr Peter Winter, an expert on the European Train Control System which is the latest European technology and much more advanced than TPWS, was brought with a flourish to New Delhi in 2003-04 by the multinational lobbies, and I was made to face him before the Railway Board. He agreed that ACD was performing more functions than their system, needing no human inputs, and at a fraction of the cost. It embarrassed the lobbyists no end.

Q: ACD was introduced in Konkan Railways early this decade and later in NF Railways. How has it performed so far?

A: ACDs are almost like humans. There is a gestation period of three months for them to pick up the peculiar geographic layout features of the track routes. After initial survey, and after fine-tuning the network over 3 months, the results automatically logged in by the computers of the ACDs are downloaded and the records jointly analysed to previously set performance requirements of the Railway Ministry. Both for manufacture and performance ACD fully satisfied, and the fact sheets were jointly signed off by all stake-holders.

Q: Are there legitimate "operational issues" and adaptations necessary to ACD's which the Railway Board says have created delays, or is it repeated revision of norms by the Board and a lobby in the signaling department pushing for an expensive technology that has created hurdles?

A: This is a typical attempt to obfuscate and confuse, in the knowledge that there is no one who dare question them. Under electrical wire, GPS working was tested in 2001-2002 itself. There are no legitimate reasons to delay ACDs except those imaginary ghosts created by officials to save their own skin for not implementing ACD. The lobbies of retired and serving officers are working actively with foreign technology companies and ACDs requirements were continuously modified from 2002 onwards, even though every time the Board and ministry promised that it would not be changed. The moment the goal post is reached, and requirements satisfied, factoring in almost inimical testing attitudes too, another bright suggestion is moved in the Board's file, and again ACD goes back to another round of testing and trial. Many senior railway officials are genuinely ignorant and accept such suggestions slipped in by people who have successfully stalled the ACD all these years. As Railway minister, Mr Nitish Kumar used to tell a new Board member at an ACD meeting that the member's remarks showed he did not understand ACD, and set out explaining himself to the Board member how ACD works for the next ten minutes, while the member used to squirm in his seat. Being a technically knowledgeable man having no private agenda he could do that. From 2002-2003, the ACD was fully ready for preventing all the accidents which occurred at its technology development level. I would hold the officers who played this game of stalling squarely responsible for all the souls lost in railway collisions since then. I wonder what kind of karma they will suffer for their callous actions?

Both Miss Mamata Banerjee and Mr Nitish Kumar have supported the introduction of ACD in the past. Are you hopeful that, even now, a decade since ACD's became an option, the Railway Minister will be able to see through the lobbies of TPWS that are acting through the Railway Board? Miss Banerjee is simple and likable, I hold her in highest respect. Mr Kumar was straightforward and an outstanding humanist. He once mentioned to me that when he had earlier resigned with anguish due to so many deaths in a railway collision, why did not a single Board Member resign as well? I told him, Board members are just employees and either retire or get sacked. He cannot expect them to be like him. The Minister is expected to control them. The paradox is Miss Banerjee is the one who started this ACD against Board's advice in 1999 and finally it appears the Board has won and succeeded. Knowing her personally I feel, she does not deserve the game the bureaucracy is playing with her. I feel sad that she is being made to face all the ire for loss of life whereas the culprits are still at large. The mafia at the Board is difficult to break unless there is one courageous man to stand up within the service. I did that job in my time to the best of my ability. There are better people but they must stand up.

Q: Following from what you have said, how frustrating has it been to know that the ACD technology, if employed sooner, could have saved many lives in dozens of major accidents?

A: The situation is putrid. I told a member of the Board who was blocking me, how he would have liked if his son or son-in-law was in that ill-fated coach involved in the collision? He got furious and red in the face. Sad, but why and when did we become so indifferent? Again the same tragic event is being used to line their pockets by those who are responsible for safety of the travelling public. How do we tolerate white collar crime by intelligent people specially selected for serving the nation as responsible Class I officers, who gang up to do what they are doing for the last decade and more in Railways? What President APJ Abdul Kalam said to me is so very correct. I wasted time in India ~ he told me I should have taken that University seat I was offered in 1966 and gone to USA. Then India would have taken pride in my work and welcomed me as a great engineer-scientist and gladly adopted the foreign company implementing my technologies at 5-10 times the cost. Today these words haunt me. But, the dead souls cry out for justice and I still pray my country does not lack conscience.
Source The Statesman, Kolkata

‘Bureaucrats are both running and ruining the country’

Even as the Cabinet cleared the Whistleblowers’ Bill, Mr Atul Kumar, a serving Indian Railways Stores Officer (since 1981), spoke in a personal capacity to Shiv Karan Singh, Principal Correspondent, about corruption in the Railway procurement system and the consequences faced by those who blow the whistle. Mr Kumar has regularly been pointing out problems in the Railway procurement system, resulting in colossal revenue losses. His entreaties have fallen on deaf years, but have led to his frequent transfers. The officer has degrees from the Delhi College of Engineering, IIT (Madras), and IIM (Kolkata), and has worked as Material Managers in South-Eastern, Northern, Central, Western, Eastern, East-Coast and Southern Railways, as well as at Chittaranjan Locomotive Works and Integral Coach Factory (Chennai). Mr Kumar is presently awaiting transfer from his recently held post of Controller of Stores Metro Railways (Kolkata).

Q: You are amongst the few officers who have a history of speaking the truth about irregularities that dog Railway procurement. How has the Railways’ leadership responded to your efforts?

A: ‘Sachchi baat kahi thi maine, logon ne sooli pe chadhaya’ goes a ghazal by Sabir Dutt, which sums it up. Senior management has treated me as a pariah, transferred me frequently, and denied me my due in the organisation. But, far more importantly, they have not bothered to address the issues that I have brought to their attention, which are in the larger public interest. Rs. 5,000 crore, leaking out just from Railways procurement per annum, is not a small sum that can be ignored for long, especially in a country where 77 per cent of the population lives for less than Rs. 20 per day.

Q: The Statesman published reports detailing Railways corruption that has blown an estimated Rs 50,000 crore hole in the public exchequer in the past decade. While the Board has maintained a resounding silence, the Railway Minister has welcomed the news, stating, ‘we have learned a lot from these reports.’

A: I hope the Minister meant what she said. The media loves to blame politicians. However, it is bureaucrats that are both running and ruining the country. With the present Minister’s credentials of integrity, it is not so easy for the Board to pass the buck to her, as bureaucrats usually do. But the top layer will always try to keep her in the dark. The Minister may say one thing but top bureaucracy does just the opposite. I have further been victimised through unceremonious transfer, a tool readily available with Railway administration, as the Board perceives my detailed letter written to them four months ago to be the basis of your reports. The Railway Board believes it is more powerful than the Minister, and even the Government of India. Look at how the Board has suppressed the posts of Board Members for S&T and Stores for a decade, despite these having been approved by the Government and Ministers.

Q: How do you say you have been victimised?

A. I have been arbitrarily transferred again within just over a year, and the peculiar thing is there is no vacancy where I am going. A large number of suppliers implicated in my letter are based there.

Q: Railways has expressed concern over misuse of Rs. 100 crore that it has pledged for the Commonwealth Games (CWG). Given the immense irregularities in Railways procurement worth thousands of crores, what do you make of this sudden concern amongst Railways leadership for corruption in CWG procurement and commissions?

A: Yes, it is amusing and sad all at once. If Railways are so concerned about their image they should clean their own house first, no? CWG irregularities, even though so blatant, are peanuts compared to the leakage taking place in Railways. CWG is a one-time scam while the leakage reported in The Statesman is perennial. Existing checks and balances in our bureaucratic system have miserably failed.

Q: Why are Stores officers helpless in the face of supplier cartels that over-charge?

A: In one sense they are helpless because of their own volition. If they put their foot down, don't accept overpricing, and speak in one voice, cartels can't dominate so much. However, this can only go so far, because on the other hand, they hardly have any say in development and selection of vendors they have to buy from. The rules of the game are set elsewhere. Stores officers just play the game, like robots acting through pre-programmed software. That too when they are also engineers selected through UPSC at par with officers of consuming departments.

Q: Isn’t the push for a Member (Stores) only a cadre aspiration that will not actually stem corruption?

A: In this context, corruption is not the central issue. The issue is organisational need and professional independence; that the Stores department remains under one user departmental Head is just ridiculous. The need for post of Member Stores was approved by the Government more than 10 years back. It should be beyond debate now. Quite amazing though that the Railway Board has repeatedly succeeded in stalling it. A Member Stores may not solve the problems in procurement overnight but will definitely boost the morale of the cadre responsible for procurement worth Rs 25,000 crore and scrap disposal over Rs 3,500 crores annually, and strengthen them professionally. With good leadership, this will begin stemming corruption also.

Q: Railways still has its share of honest officers. Why do they not speak out?

Rly probe into corruption

BHOPAL : The Railways have launched an investigation into the corrupt nexus of suppliers, senior railway officers, and retired bureaucrat-lobbyists, which has robbed an estimated Rs. 50,000 crore from the exchequer in the past decade. The investigation follows a series of reports in The Statesman last month.

It comes after the railway minister, Miss Mamata Banerjee, reacted to the reports and sent a hand-written note to the chairman, Railway Board. Now, the Railways’ Anti-Corruption wing has commenced wide-ranging inquiries into the corruption that covers many ministerial eras.

All rail zones and production units have been directed to provide purchase information for the past five years in connection with 10 items of railway procurement detailed in the series of reports. Miss Banerjee’s strong anti-corruption stance has triggered an unprecedented data-collection and analysis exercise, and skeletons have already begun tumbling out of the well-stocked Railway closet. According to sources in Delhi, several cases have been filed. Simultaneously, the Anti-Corruption unit of the Central Bureau of Investigation has also launched inquiries.

But there is much more to railway corruption. Further information unearthed about PVC flooring sheets, one of the seven ‘fire retardant’ items approved with unjustified approximate costs for mass-purchase by ex-Member Mechanical RK Rao and ex-Finance Commissioner R. Sivadasan in February 2007 as part of a multi-hundred crore rupee exercise, is damning. Passengers do not know that the grimy compartment floors they step on are worth their weight in gold.

Coach floors, lined by newly specified PVC flooring sheets yielded a bonanza for three suppliers, selected by bureaucrats in a three year- Rs 200 crore business. After new specifications were laid down, individual sheet prices jumped from Rs 1,200 to a whopping Rs. 8,600 in 2008. The railways procure 1.5 lakh units per year, and the three firms are estimated to have made profits of Rs. 50 crore in 2008 itself.

When this cartel of suppliers broke up ~ a period when costs of production were on the rise ~ prices plummeted to below Rs. 3,500. Increased prices were supposed to mean improved quality. Investigations show the opposite. Sources in Integral Coach Factory (Chennai) and Railway Coach Factory (Kapurthala) have shared documents with The Statesman showing that one of the suppliers, Responsive Ltd., repeatedly failed quality tests. A letter written in 2009 to RDSO by a conscientious Chief Mechanical Engineer in Kapurthala, complained about these failures. But it did not result in RDSO downgrading the firm. The premier railways research and standards organisation allowed Responsive Ltd to continue making merry; it asked the firm to investigate itself!

Another of the seven fire retardant items under the scanner is Recron, purchased for seat and berth fillings. According to sources, the introduction of Recron in Railways stemmed from the interest of Ms. Reliance Industries Ltd., the polyester kings. There have been complaints within Railways, whispered at the highest levels, about the unsuitability of Recron, which hardens and sets causing discomfort to passengers.

Many of the suppliers of the ten items being investigated also supply other items at grossly inflated prices under different names. For example, some of the players in the ‘odour control system scam’, are involved in supplying PVC angles. The four approved firms ~ SR Plastofabs, Elektra Engineers, Dinesh Kumar & Co, and Manak Overseas Ltd. ~ sell lakhs of PVC angles for Rs 75 each. Senior railway officers told this reporter that the item has a manufacturing cost of Rs 10.

There is no independent vigilance ombudsman answerable directly to the Minister, and Railway vigilance itself is at the mercy of the Railway Board. Thus unless Ms. Banerjee stays the course, there is a chance that in the case of investigations related to The Statesman’s reports too, action will only target junior officers and weak suppliers instead of the systemic corruption that flows from the very top of Railway bureaucracy.

Perhaps sensing intense corruption in RDSO’s vendor approval system, Ms. Banerjee had in January, on her own initiative, ordered an eight-member high-powered committee to revamp the system. The committee has recommended that the task of vendor inspections be taken away from RDSO; “that vendor approval work at RDSO be substantially reduced and RDSO should focus on its prime activities, i.e. Research, Design, Standardisation, and Development.” All Board Members including the Chairman have agreed, save the Member Mechanical. Both Mr. Praveen Kumar and Mr. Sanjiv Handa, ex and serving Members Mechanical, are learnt to have resisted the recommendations.
Source The Statesman, Kolkata

Will Didi slay the railway demon?

The Union railway minister has warned senior officials that she will not tolerate corruption but the difficulty lies in seeing through the demon’s disguises right down to the systemic fault-lines that keep it rooted, says
Shiv Karan Singh

Late last year, during vigilance week, Railway Minister Mamata Banerjee termed corruption as a “demon’’ and stated that there is no place in the Railways for corrupt officers. More recently, the annual general managers’ meeting found the minister directly warning senior officials that she will not tolerate corruption and that, given evidence, heads will roll. Bureaucrats have got the message, but corruption is a fertile demon. Cut one head off, another will grow back. The difficulty lies in seeing through the demon’s disguises right down to the systemic fault-lines that keep it rooted.

There is incentive and opportunity for Miss Banerjee to assess and amend features of railway procurement that give rise to the demon, especially now that her ambitions in Bengal appear to be on course. What is really at stake is the setting of a precedent. Certain systemic changes will save enormous amounts of public revenue in coming years, check future corruption, help better fulfil Vision 2020, and gift the minister an enviable legacy. On the flip side, without these corrections, the railways will drift away from being a “:lifeline to the nation’’ that brings growth to new sections of society; it will remain a gravy train for the same suppliers, only increase inequalities, and allow the demon a royal feast.

In questioning the transparency of RDSO’s supplier approval system and instituting a senior committee to study the functioning of this railway R&D body, the minister has made a promising beginning. But history shows that a little tinkering will achieve nothing. In 2005, the Central Vigilance Commission made detailed recommendations to the Railway Board, addressing high prices and lack of competition caused by RDSO’s nonsensical Part 1-Part 2 supplier division and “:large-scale corruption’’ in both product inspections and the process of approving suppliers. Only token changes resulted.

A 2006 CAG report showed how decentralization of procurement was done in an ad-hoc manner; that it failed to reduce time because suppliers were given undue favour; and that it created uncontrollable cartels and scandalous upward fluctuation of prices. What steps has the board taken since to eliminate cartels, introduce competition, and normalize prices? At one annual controller of stores meeting after another, complaints have been parried by board members with religious chanting of the board’s weak orders that have failed to control cartels or have been reduced to discussions about whether to centralize or decentralize the purchase of an item. Both centralized and decentralized procurement still suffer from three unaddressed problems: restricted competition, no independent techno-economic cost analysis, and, lack of professional independence for procurement officers. These three fault-lines keep the railway demon well fed.

Consider the independence of procurement. Members of the minister’s senior committee have noticed that the sole railways R&D body, Research Design & Standards Organization (RDSO), was formed in 1957 to do just as its name suggests: conduct research, develop and absorb new technology and design, and maintain quality, standards, and specifications. Nowhere in its mandate does it say that RDSO should be involved in vendor selection. Why has RDSO given research short shrift and become far more interested in creating approved supplier lists for all kinds of railway items?

The change occurred in the mid-1990’s. A 2004 CAG report shows how the research body had begun spending only 10-13 per cent of its entire budget on research and that its technical staff had shrunk in size. A closer look will show why, under the watchful eye of the Railway Board, RDSO has become a den of corruption in procurement, unleashing high-priced fruits of closed competition that the entire railways has been forced to swallow.

In RDSO, and in each of the six railway production units that create approved supplier lists, it is the numerous consuming directorates, like the mechanical and electrical directorates, rather than the one procurement directorate of stores that decide on and approve suppliers for items. This is an anomaly. It is one reason for the continued support of non-competitive bidding and attached corruption. It has removed a safety valve in the form of stores and increased direct contact between those that need and specify parts and private suppliers.

Standard practice calls for the procurement directorate to be involved in approving and developing vendors under the lead of a member stores on the Railway Board. This is not a novel idea. When the Railway Board was first reconstituted in 1924, with four members, one handled projects and stores. Some time after Independence, the entire stores directorate, peopled with officers trained in procuring materials for all kinds of railway items, began to function under the diktat of Member, Mechanical Railway Board.

Recently, given the importance and volume of railway procurement, there has again been a push for a member stores. But, despite this post having been recommended by parliamentary standing committees, a railways reform committee, a cadre review committee, the 5th Pay Commission, and sanctioned by the government of India and previous railway ministers, its creation has been repeatedly stalled by the board.

The reason new posts on the board are being resisted is that railway departments function as empires, fighting internecine turf wars. Fights are for control of infrastructure, personnel, and funds, in both substantial projects, like which directorate will control which freight corridor, and petty cases, which result in the irrational division of responsibilities even within trains. For example, what sense does it make that the mechanical directorate should oversee on-board cleaning contracts? Only when one notes that until recently the Rs 250 crore cleaning racket had Rs 150 crore annual profit margins, does this begin to make sense; rationality plays truant in the game of power and revenue.

In terms of stores, the member mechanical refuses to cede control because with it the mechanical directorate can dictate terms on annual procurement worth Rs 30,000 crore as well as the independence of stores personnel, especially given that the second largest employer in the world having 14 lakh employees has no proper transfer policy. When few honest stores managers find suppliers fixing prices, they can do little because their posts are in the hands of the very consumer department heads on the Board that approve suppliers. Stores managers are thereby reduced to mere observers of the tender process, called in only when it is time to sign away the high-priced loot.

A member stores on the Railway Board would spoil the party, which is exactly why the minister should push to re-create this post, and involve stores in vendor selection. However, recent events show the nature of counsel given to the Minister. The arbitrary transfer and virtual sacking of Mr M.P. Juneja, the seniormost stores officer, and a man reputed for his honesty, has further weakened railway procurement in the face of the demon. The highest stores post of additional member that Mr Juneja held has been downgraded to accommodate a junior officer. Did the demon make the Minister score a self-goal? Unless the minister realizes her error, the loot is set to continue.

The second and rather unbelievable lacuna is that railways does not conduct its own independent techno-economic cost analysis, that is, an estimation of material and processing costs of items, before mass-purchase. Given that there is no open competition to automatically control prices, this is astonishing. Numerous cases of overpricing, enumerated in a decade worth of CAG reports, some of which were open scams that no one cared to question, have benefited from this fact. At present, the only basis for assessing tender quotations is the last purchase rate, which suppliers fix and raise with every purchase. Three decades ago, a railways reform committee recommended the creation of zonal “:cost estimation cells’’ to bring order to prices quoted by restricted suppliers. Independent cost estimation cells at both the zonal and board levels need to be instituted to stop the large-scale revenue loss.

Lastly and most painfully obvious is the need for open competition. The minister would be wise to do away with the arbitrary distinction between Part 1 and Part 2 suppliers for all non-safety items. Part 2 suppliers, who bid for a small piece of the pie in each tender, undergo the same quality checks and tend to quote lower prices. It makes no sense to keep this irrationality alive. The CVC and the Comptroller Auditor General have repeatedly stated that this division causes railways immense revenue losses and promotes corruption. The railways could also benefit from the advice of the Competition Commission of India (CCI) if it were to consider a procurement overhaul. In 2006, the Railway Board circulated a routine letter that evidence of cartels should be reported to CCI. The CCI was, however, not functional during UPA 1, and cases reported were returned untended.

The CCI is up and running now and it would be telling if the Railway Board has not already taken recourse to guidance and officer education from the one agency that can help make its procurement process competitive. With the TERI report on competition in the transport sector commissioned and released in March 2009, the CCI already sits briefed about the corruption in the railways courtesy anti-competitive practices. However, at present, it appears that the railways only stands before the CCI as an accused, with Jindal Steel and Power Ltd taking the railways to task for its exclusive agreement with Steel Authority of India for the supply of rail tracks. The nation would benefit if harmful competition between railway departments is controlled and open competition between private suppliers, with demon-free quality inspections, is allowed to flourish.

The writer is The Statesman’s Bhopal-based Principal Correspondent

When cost & price are unrelated

KOLKATA : Profits for firms that supply parts to the Indian Railways hit the roof at the height of the economic downturn. Even when prices of constituent metals crashed, prices at which Railways purchased hundreds of finished products continued to balloon. The reason for this is that as much as 80 per cent of Railways procurement is uncompetitive. The supply market is cocooned in oligopolies. Approved vendors form cartels, doctor prices, and fleece the public exchequer no matter what the real market conditions.

Take signal and telecom cables, purchased in enormous quantities by Railways. Two kinds of cables are laid alongside railway tracks: underground jelly-filled quad cables and optic fibre cables (OFC). Quad cables are made of copper, aluminium, iron, and PVC compound. In a March 2007 tender, S.E. Railways purchased 439 km of quad cables at Rs. 1,54,000 per km. In December 2008, amidst the global economic crisis, the same zonal railway purchased more cables at a significantly higher rate of Rs. 1,84,000 per km. A standard price variation clause analysis, which uses rates of constituent materials published by the Indian Electrical and Electronics Manufacturers Association (IEEMA), finds these cables overpriced by around Rs 60,000 per km. In December 2008, IEEMA rates for copper, aluminium, PVC compound, and iron fell by 41, 19, 5, and 9 per cent respectively. Yet, the quad cable price shows a 20 per cent jump, and is almost 50 per cent over what the market rate should have been:

By chance the quad cable cartel collapsed in bidding for a September 2009 tender, exposing the first unfixed rate in years. Southern Railway ended up purchasing 340.37 km of cable at Rs 1,37,950 per km. This represents a fall of 25 per cent in cable price despite IEEMA rates of copper and PVC compound being on an upswing at the time, having increased by 81 per cent and 15 per cent respectively. Railways purchase prices have little to do with real market prices.

High-priced loot by the quad cable cartel is an old phenomenon. It finds damning mention in numerous CAG reports and Controller of Stores meeting minutes. A Railway Board letter written in March 2010 again admits to the continuing robbery. But, with no changes in policy, arbitrary prices quoted by suppliers continue to be accepted. The case of OFC is similar. A 2006 CAG report noted prices of OFC and quad cables fluctuating between 10 and 150 per cent higher at the same time across zones between 2002 and 2004. Such price increases for OFC continued during the economic downturn.

A Southern Railways tender committee expressed shock at the price quoted in a June 2008 tender, an unjustifiable increase of 44 per cent. In response to the behaviour of the approved firms, Sterlite Technologies Ltd. and Vindhya Telelinks Ltd., Southern Railways recommended the Railway Board take "stern exemplary action" against them and de-approve or downgrade the firms. The firms still remain approved suppliers.

Sterlite Technologies is a subsidiary of the Anil Agarwal owned Vedanta Resources, while Vindhya Telelinks is a joint sector venture between an MP Birla Group concern and Madhya Pradesh State Industrial Development Corporation. In 2000-01, during the exposure of the NDA telecom scam, the same two companies and their sister concerns were accused in Parliament of forming cartels and doctoring OFC prices. Sterlite Technologies, was formerly Sterlite Optical Technologies Ltd., a 100 per cent Export Oriented Unit, accused of evading duties and transferring its OFC for sale through its domestic unit by Central Excise Officials, for which it was directed to pay a fine of approximately Rs. 250 crore. The case involving this payment of fine, which saw the present Home Minister and his wife representing Sterlite at one stage, is still in court. A total of 9,000 km of OFC cables will be procured by Railways in the next few years, which the same firms are set to supply.
Source The Statesman, Kolkata

The Sweet Smell of Corruption

KOLKATA : Fragrances with descriptions such as ‘sweet mandarin orange and tart grapefruit and lemon play with sweet vanilla’ have been installed to counter malodours in train coaches and toilets across the country. These scents and their dispensers appear to be of great national importance. Over the past five years, they have been purchased in huge quantities by Indian Railways, from only three Indian suppliers of one multinational company at ten times the cost. The Railway Board, Research Design and Standards Organization (RDSO), and supplier nexus, have joined hands to protect the sensitive nose of the Indian passenger, creating, in the process, a real stinker.

In 2005, RDSO advised Railways to install ‘odour control systems’ in AC coaches and toilets of trains, authorising only three Mumbai-based suppliers, Jade Consumer Products, S.R. Electronics, and Dinesh Kumar & Co., to supply these. It turns out these odour control products - Micro Burst and Auto Janitor - are brand names of one of the largest global players in the field, Technical Concepts, UK. And, the three suppliers authorized by RDSO are, as per Railways, the same three suppliers selected to supply the products in India by Technical Concepts. With competition thus jettisoned, a royal feast commenced.

In 2005 all zonal Railways began issuing ‘open’ works tenders for odour control systems, won always by the same three suppliers. Board Members would have one believe that for five years no one noticed that micro-bursts with an import cost of Rs 415 were being bought for as much as Rs 4,600. One phone call to London would have revealed the true price, but the independence and initiative of zonal material managers to fight inflated prices of suppliers has long been compromised by the Railway Board.

A complaint was in fact lodged by S.C. Railways in 2006-07, and the Central Vigilance Commission got involved. But, only a warning limited to that zone was issued against such purchases! Other zones have continued to purchase these systems at the same inflated prices for five years. As a result of this largesse, today Jade Consumer Products, partner to Technical Concepts, has become ‘India’s leading supplier of air care and hygiene solutions for away-from-home washrooms.’

Only in 2010, with crores of public funds already flushed down the procurement toilet and into the pockets of chosen suppliers, has a Railway Vigilance letter been sent to all Zonal Railways simply telling them not to buy these brands at ten times the cost and to look for RDSO specifications instead! The game of restricted competition is still so set that the RDSO specifications, as in numerous other cases, are designed to match brands.

According to this vigilance letter, of the three suppliers, only Jade has been importing these items from Technical Concepts and that the other two ‘might’ be supplying the products after buying them from Jade. Given this fact, and given that Zonal Railways have been buying a brand and not an item with specifications, there is no way of knowing what scents and what dispensers have been bought in lakhs by Railways in the past five years and whether two of the dealers have even supplied anything imported. Who are the Railway officers that benefited from this windfall for three suppliers?

More importantly, what is it in Railway Board administration that allows for corrupt bureaucrats to support such loot? A search for answers will point to some fundamental problems.
Source The Statesman, Kolkata

Corruption by Board’s design

KOLKATA : The Railways have remained the coveted portfolio for key North Indian alliance partners of the NDA and UPA regimes in the decade past, providing an invaluable stage for political grandstanding. The last decade has also seen the Railways retain their unofficial tag of being the most corrupt department after Defense, in terms of volume, though Telecom and Mining appear desperate to join the party. Windfall profits for supplier cartels, kickbacks for bureaucrats, and enormous loss to the public exchequer have been routine. There has, however, been one notable design to the loot.

The Research Design and Standards Organisation (RDSO) has periodically introduced new or upgraded specifications for Railway parts. These new or modified designs usually represent an improvement in technology or increased safety. However, as a 2004 CAG report shows, the Railway Board undertakes no independent cost analysis when a new product replaces an old one. As a result, select firms approved to supply the new product gang-up, start quoting exorbitant prices, and make a killing. In time, other approved firms crowd the party, the cartel becomes unwieldy, prices fall, profits stabilize, and it is time for another design modification.

According to sources, not only do suppliers fix prices amongst themselves, they also find ways to fix the introduction of new modifications in collusion with Railway Board and RDSO officers. It takes as few as 3-4 senior bureaucrats to introduce a new over-priced product for chosen firms to supply, which the entire Railways then buys in enormous quantities resulting in crores of rupees in profits and kickbacks. Examples of this racket abound.

Rubber side bearer pads have seen three designs in less than 2 years. First the Railway Board asked all zones to replace metal bonded rubber pads with vulcanite pads. The three approved suppliers began charging four times the price, making windfall profits due to enormous purchases. In a little over a year, the Board recommended vulcanite pads be replaced by polyurethane pads, and again three Lucknow-based firms ~ Aryan Exporters, Avadh Industries, and Prag Industries ~ began to feast, this time charging over 10 times the original pad price. What used to cost a little over Rs 300, now costs around Rs. 4,000.

Given that the Railways used to purchase 8 lakh pads annually, the additional cost has already run into hundreds of crore of rupees and counting. Tests and complaints in all three pads show similarities. RDSO admits “no significant difference between the performance of polyurethane pads and other side bearer pads”, the latest pad is not being purchased as if it were any longer lasting, but no justification has been offered by the Board for this 10-times costlier pad.

Coach vestibules present another example. A design change reduced the number of approved suppliers from seven to one. This one initial supplier set rates for the new vestibule that rocketed from Rs. 9,000 to upwards of Rs. 30,000, where they still hover. The Railway Board has offered no justification why the modified vestibule merits thrice the original price.

Yet another item where this racket is awaiting discovery is in the part called phenolic brake gear bush. The older nylon bush has 22 primary and 9 secondary approved suppliers. But, the newly specified phenolic bush, which is supposed to improve oscillation, has only one Kolkata-based supplier at present, Synthetic Moulders Ltd. All 'open' tender contracts for phenolic bushes are won by this firm. How is it that the mighty 'nation-builder' could find only one supplier in the whole country for this part? There are dozens of such items where only or two suppliers have been cultivated.

In a February 2007 letter sent to Railway zones for commencing mass purchase of seven upgraded coach items, the Railway Board implicates itself. The letter is infamous within Railways. According to sources, an investigation into how it came into being and what its ramifications have been would uncover anywhere between a Rs 500-1,000 crore racket.

In introducing these items, which include PVC flooring, fire 'worthy' upholstery, and recron, the Board not only does away with independent cost-analysis of the new products as per usual practice. In an unprecedented act, it goes further to suggest an 'approximate cost' for each new item, with the costs set at levels in some cases double what should have been the real market prices. The result: hand-picked companies used this approximation as a floor price in bids and generated windfall profits.

The price of the first item on the list, vinyl flooring sheets, is approximated by the Board at near Rs. 17,000 for a specific unit. After two years of extra-ordinary robbery, when one stores manager was able to break the vinyl flooring sheet cartel in May last year by negotiating strongly and retendering, the price at which purchases were made stood below Rs. 9,000, at half the Board's 'approximate cost'. In suggesting the costs it did, the Railway Board removed the final obstacle that on rare occasions prevents and usually only delays chosen suppliers from making merry.

Zonal tender committee meeting minutes detail struggles to justify the prices being quoted by an item's approved suppliers. This letter provided the green signal to stores managers to shut their eyes and sign away the loot. The prices crony suppliers want, they will get, even by official high-level sanction. The last decade has not witnessed a people's Railways, but a well-designed cartel Raj.
Source The Statesman, Kolkata

Railways gift Rs 50,000 cr to cartels

KOLKATA : Railway supplier cartels have fleeced the public exchequer by about Rs. 50,000 crore in the past decade. Indian Railways have been happy to play accomplice ~ currently the Railways spends about Rs. 16,400 crore annually via uncompetitive bidding. A document written by a Senior Material Manager, with over 25 years experience in Railway procurement, alleging massive procurement irregularities is circulating in the Railway Ministry. It details how 'the lifeline to the nation' is a wish-fulfilling cash cow for the few that benefit from its procurement system.

Internally, the railway minister Miss Mamata Banerjee has been talking of attempts to clean up the 'approved supplier' rot in Indian Railways ~ questioning the transparency of the Research Design and Standards Organisation’s (RDSO) vendor approval system and instituting a committee to review RDSO's functioning. However, the problem is entrenched in that it begins with the Railway Board itself, which has supported a framework where both cartels and corrupt bureaucrats flourish. That several retired Board Members and General Managers work for the biggest suppliers, makes breaking cronyism even harder.

The document circulated by the senior manager alleges that out of Rs 20,500 crore of annual procurement, 80% is completed in restricted competition. This virtual license-raj of approving suppliers favours select firms over others, resulting in the creation of cartels that quote prices unrelated to market conditions and jack up prices of goods by a minimum of 30 per cent or Rs. 4,920 crore annually. Add to this the trend of shifting contracts from supply to material intensive works contracts, having another layer of over-pricing and corruption, and even Rs 5,000 crore lost annually becomes an underestimation.

Miss Banerjee has announced that Railways lost Rs. 500 crore due to Naxalism and disruptions in 2009. It appears the Railways gifted at least ten times this amount to chosen suppliers during this period, due to a procurement process that combines the worst of both open and closed market systems. On one hand there is restricted competition, on the other no effective control on cartel behaviour or prices.

A decade of 30 per cent overpricing in non-competitive procurement with interest foregone raises a figure of around Rs 50,000 crore, which puts the revenue squandered

In IPL subsidies to shade and can only be compared to the colossal NDA and UPA 'first come first served' spectrum scams. While Telecom seems to manage with one big scam per coalition per decade, Railways chugs along like a tortoise to the hare, doling out comparable revenue.

In 2001, Railways decentralised purchase of 45 stores items to zonal Railways, with approved suppliers decided centrally by RDSO and Production Units. While the Railways repeatedly failed to benefit from lower prices in bulk centralised purchases in the 90's, a 2006 CAG report shows that post-decentralisation an uncontrolled cartel feast of over-pricing ensued. Under the indulgent eye of the Board, its weak orders, and excuses of expediency, suppliers have benefited from the feature of the last purchase rate for an item in any of the 16 zones being automatically treated as the next minimum tender bid rate. Any increase in rates for an item in any zone, has made all subsequent purchases more expensive.

Approved suppliers have continually fixed prices and kept them piggy-backing upwards across zones. Apart from thousands of crores lost due to incorrect contract and asset management, CAG reports have found scores of instances of price inflation in purchases of items. Especially egregious purchases include: sleepers bought at prices four times higher, ballasts bought and tracks lifted at prices two times higher, signal and telecom cable works contracts granted in the same zone in the same year rising between 10 and 150 per cent, grease seals with 80 per cent profit margins, and undue benefits to contractors like paying crores in unwarranted sales tax.

Cartels flourish due to corruption amongst senior officers. In 2005, Zonal Railways faced brake block prices quoted by Kolkata-based firms Pioneer Friction Ltd. and Hindustan Composite Ltd. that had without justification inflated by 38 per cent in one year. Ignoring the tender committee, senior Railway management deemed the price reasonable and ordered immediate purchase of 24,000 units from Pioneer Friction at its padded price. News broke in 2008 that the company had been bribing Railway Board officials, RDSO officials, Zonal Railways officials, and RITES inspectors at least Rs. 75 lakh between 2001 and 2005.

Duly impressed, the Board and RDSO had approved Pioneer Friction as a dependable brake block supplier; gifting it Rs 1.16 crore as profits in 2005 itself. The Assistant Inspecting Engineers, directly involved in inspecting and approving Pioneer Friction, work directly under the Member (Mechanical) Railway Board and the Executive Director Quality Assurance (Mechanical) RDSO. The company has been banned, a vigilance enquiry has dragged on for two years, and even the Prime Minister's office and CBI have become involved, but the Board has not been questioned and no official has been held accountable.

Railway procurement is set to triple in a little over a decade; corrupt bureaucrats and cartels are rubbing their hands in glee. According to Vision 2020, the Railways plans to lay 25,000 km of track, procure 2.8 lakh wagons, 50,880 coaches, and about 10,000 locomotives, amongst other expansions. Unless a procurement system that promotes competition and independently analyses costs before purchase materialises, annual loss of Rs. 5,000 crore will appear scant, and by 2020 the nation might have to confront Railway revenue losses to the tune of Rs. 1,00,000 crore.
Source The Statesman, Kolkata

Manhandling of Officers in CLW

by members of various Unions

Chittaranjan : It is to communicate with great pain that Shri Vishwajit Jha, ASTE/CLW/Chittaranjan, a Promotee Officer, was manhandled by a team of RMU Workers lead by one Shri S N Singh, Zonal Secretary, RMU, CLW on 27.08.2010. Shri Jha was admitted in ICU of K.G. Hospital, Chittaranjan with injuries, shock and trauma. An FIR has been lodged with the local Police station against Shri S N Singh, Technician Gr.I, T/No 56/466 and one Shri U K Singh, Technician Gr.III, T/No. 87/166. DAR action has been initiated and the staff are under suspension.

An emergency meeting of all Group-A and Promotee Officers was held. A delegation of officers met GM/CLW and submitted a memorandum in this regard for taking stringent action against the offenders. In the recent past, Shri J N Pandey, FA&CAO/P (Class-1 officer) was gheraoed and humiliated by union members. Shri N K Ganguly, SEE/SF (Promotee Officer) was assaulted by union members in his chamber. Such incidents have become too frequent in CLW when Officers are facing such situations and it has become extremely difficult for them to discharge their normal duties.

On 06.09.2010 more than one hundred and fifty officers belonging to CLW Officers Association (FROA) and Promotee Officers’ Association wore black badges and marched to the Administration building in a procession. The procession was to exhibit the solidarity amongst all the officers whether they were Group-A or Promotee Officers. Further, it was not aimed against any particular union but against the over all deteriorating work environment in CLW, Chittaranjan. The demonstration was first of its kind in this part of the country. The anguish of the Railway officers can be well understood.

It is kindly requested to let the administration know about existence of such a situation in CLW and advised to initiate stringent measures to ensure that proper working environment is reinstated. I am enclosing a few news clips from local newspapers.

डेगाना व रतनगढ़ के बीच मालगाड़ी शुरू

जोधपुर. अर्से बाद जोधपुर मंडल के डेगाना व रतनगढ़ रेलखंड के बीच शुक्रवार को रेल इंजन की सीटी गूंजी। अमान परिवर्तन कार्य पूरा होने के बाद उत्तर- पश्चिम रेलवे मुख्यालय ने इस मार्ग पर मालगाड़ी शुरू करने को गत दिनों हरी झंडी दी थी। मालगाड़ी शुरू होने से अब लोगों की इस खंड पर जल्द यात्री गाड़ी शुरू की आस भी पूरी होगी।
शुक्रवार को डेगाना में एक सादे समारोह में सुबह नौ बजे स्टेशन मास्टर भरतलाल मीणा, मंडल अभियंता अंकुर जैन सहित रेल के अधिकारियों ने मालगाड़ी संचालन की शुरूआत की। इस अवसर पर डेगाना के प्रबुद्ध नागरिक भी उपस्थित थे। पहली मालगाड़ी 45 कंटेनर डिब्बों की रवाना की गई। इसके लिए गत दिनों रेलवे संरक्षा आयुक्त (सीआरएस) ने दो चरणों में यहां निरीक्षण किया था।

सार्दुलपुर खण्ड भी शुरू होगा
रेलवे की मंशा रतनगढ़-सार्दुलपुर को डेगाना तक जोड़ कर हिसार तक गाड़ी चलाना है। संरक्षा आयुक्त ने हाल ही में रतनगढ़-सार्दुलपुर खंड का निरीक्षण कर रेल संचालन की स्वीकृति जारी कर दी है। इस खंड के खुलने से जोधपुर से हिसार तक होते हुए दिल्ली तक की गाड़ियां शुरू हो सकेंगी।

नए क्रॉसिंग स्टेशन से ट्रेनों की राह आसान

कोटा. कोटा-चित्तौड़गढ़ के बीच स्थित नीमका खेड़ा रेलवे स्टेशन को क्रॉसिंग स्टेशन के रूप में विकसित किया जाएगा। इस कार्य से ट्रेनों के संचालन में सुधार होगा, एक ट्रेन के लगभग 25 मिनट बचेंगे साथ ही नई ट्रेनों की राह भी आसान होगी। रेल प्रशासन इस कार्य पर 3.2 करोड़ रुपए खर्च करेगा।

रेलवे सूत्रों ने बताया कि कोटा-चित्तौड़गढ़ खंड (165 किमी के रेलमार्ग) में सबसे अधिक घुमावदार व उतार-चढ़ाव का क्षेत्र श्रीनगर से जलन्धिरि रेलवे स्टेशन के बीच का है। इन दोनों स्टेशनों की दूरी को तय करने में ट्रेन को एक घंटा लगता है।

यदि श्रीनगर रेलवे स्टेशन से कोई ट्रेन छोड़ी जाती है तो उसके जलन्धिरि रेलवे स्टेशन पहुंचने तक पीछे से कोई ट्रेन नहीं चलाई जा सकती, क्योंकि बीच के स्टेशन नीमकाखेड़ा पर केवल एक लाइन हैं। इस स्टेशन पर ट्रेनों का क्रॉसिंग नहीं हो सकता। ऐसी स्थिति को देखते हुए रेलवे ने नीमकाखेड़ा रेलवे स्टेशन को क्रॉसिंग स्टेशन के रूप में विकसित करने का निर्णय किया है।

क्यों जरूरी: श्रीनगर से जलन्धिरि रेलवे स्टेशन के बीच की दूरी मात्र 24 किमी है। इन दोनों स्टेशनों के बीच 12 किमी पर नीमकाखेड़ा फ्लेग स्टेशन है, जिस पर केवल एक लाइन हैं। श्रीनगर से जलन्धिरि रेलवे स्टेशन की दूरी एक ट्रेन लगभग 48 से 50 मिनट में तय करती है।

इतने समय तक पीछे से दूसरी ट्रेन को नहीं छोड़ा जा सकता। नीमकाखेड़ा में क्रॉसिंग स्टेशन बनने से वहां एक लूप लाइन और बनाई जाएगी। जिससे श्रीनगर से एक ट्रेन छोड़े जाने के कुछ समय बाद ही पीछे से दूसरी ट्रेन छोड़ी जा सकेगी। नीमकाखेड़ा में क्रॉसिंग स्टेशन बनने से प्रत्येक ट्रेन के 25 मिनट बचेंगे।