Organisational restructuring of Indian Railways

Strategic drift of Indian Railways is due to its stagnant track capacity, declining freight transport, project overrun, poor operating ratio, and, lack of autonomy. This paper proposes two constructs for IR to mitigate sectoral competition and augment investor credibility for the next decade. The first construct is a meta-competency framework to regain its core-competency out of its constituent skills. The second construct is the top-down approach by the Government in creating a radical unitary public sector organization amalgamating railways, highways and inland waterways under Surface Transport Ministry. Further, this paper is a guidance to create an ecosystem for foreign direct investment and corporate restructuring of select IR subsidiaries in the Ministry of Railways. Strategic architecture discourse is on prioritizing economic value over passenger business.

. The dedicated freight corridors (DFC) are capable of handling 25 tones and scalable to 32.5 tones (Rizvi & Bharti, 2015). The axle load of existing heavy-haul railway lines in China is 25 tones and development is in process to increase it to 30 tones (Shao, Li & Chen, 2019). In 2011-12, road transport share in India's transport sector was 69% in freight traffic and it is expected to 55% cent in 2021-22 (NTDPCR, 2012. According to the Planning Commission (2013), IR used to contribute only 1% of GDP from surface transport in India.
Likewise, in 2017-18 roadways contributed 3.06%, railways contributed 0.75% and inland waterways contributed 0.06% only in India's gross GVA v . Transport sector contributed 4.77% in India's GVA (Economic Survey, 2018). This is an alarming macro-economic situation because road transport sector is always expensive in a longer distance function and critical to India's vulnerability as a net importer of crude oil (Chakrabarti & Arora, 2016). Cumulative losses from the passenger segment in IR added up to INR 789 Billion from 2016 to 2018 (Goyal, 2018).
Government's failure to curb green-house gas emission (GHG) associated with transportation value chain (Climate Watch, 2019) may fail India's 2030 commitment at Paris Agreement vi . IR employs approximately 1.3 million employees. It has two core engineering departments: Construction for project management and Openline for operations & maintenance.
In 2017, IR started collaborating with foreign partners like Google Inc., General Electric and Electronic copy available at: https://ssrn.com/abstract=3574155 Alstom SA. Through its subsidiary RailTel, IR is providing wireless internet access in about 230 major railway stations. IR made an exception in sourcing diesel locomotives in 2017 when the Government opened FDI route for GE and Alstom for diesel locomotives, turnkey solutions and electric trains (Economic Times, 2017). At an operational level, IR is establishing integrated semi high-speed corridors between major industrial hubs in the Delhi-Mumbai and Delhi-  Electronic copy available at: https://ssrn.com/abstract=3574155

Competing transport segments
The Inland Waterways Authority of India (IWAI) was set up in 1986 with little guidance.
IWAI policy was in vague because there was little thrust for inland waterways sector (Chawla, 2016). Later, in the 12 th Five-year plan (2012-2017), inland waterway segment was allocated INR 10,500 crore, incentives with tax exemption and 100% grant for waterway infrastructure development in the North Eastern India (Kurup, 2012). Subsequently, in the 13 th Five-year plan, strategy implementation for IWAI was US$ 10 billion projection in inland waterway infrastructure. This was a boost for industry participants in core areas of maintenance, operations, and harboring (Global Market Insights, 2018). For policy makers, the benefits in inland waterway transportation is its economic efficiency (Biswas, 1987), lower capital cost, uncontested right-of-way, fuel efficiency, reduced maintenance cost, less of air pollution to city, and, lesser congestion (compared to road traffic, rail traffic, unmanned crossings and manual crossing gates) are its additional benefits (Gupta, Anand & Bansal. 2017).

Losing customer segment
Deteriorating cabin services and unreliable schedule (Vanniarajan & Stephen, 2008) was an activation point for travelers to switch to low cost airline operators. The ratio of averagerailway-passenger-fares per passenger-kilometer (pkm) to average-freight-tariffs per net-tonkilometer (ntkm) was 0.3 for India, 0.5 for Bangladesh and 1.2 for China . Thus, the customers from IR's freight segment continued switching to its competing sectors in transport industry. Other factors for switching were biased transport subsidy policy, improved inland waterways infrastructure, efficient cross-docking, improved road infrastructure, and last-mile delivery in secondary distribution. The burden of higher freight tariffs is detrimental to economic growth. India's transport intensity ix is highest among BRICS countries making less efficient for manufacturing and export sector (Chadha, Paul & Tandon, 2012).It raises commodity costs and reduces operating profit across the supply chain. Though IR has competitive edge in transporting iron ore and mineral ore over short distances (100 km), this competitive advantage in distribution strategy for finished steel and manufacturing industry has a feasibility dependency of depot distance of 750 km from the factory gate/plant. Another condition is the last mile connectivity access from the depot. Thus, high cost of transportation and inefficient secondary distribution leads to sectoral substitution of two verticals important for transportation & logistics. These switching verticals are metal & mineral industry and engineering/capital good industry. The government came to rescue for IR with elimination of dual-tariff-policy for iron ore (PTI, 2016) though it was poorly commercialized to revive its declining freight business. Till 2008, the rate for transportation tariff of raw materials for cement and iron ore to the ports meant for exports was charged three times higher for same commodity meant for domestic consumption in steel and cement industries (Crisil, 2017). In this Dual Freight Rate policy of iron ore transportation for export traffic is charged a distance-based charge over and above the regular freight charges. It used to be billed per tonne from Rs 1125/-to Rs 300/- (Bandyopadhyay, Baruah & Gupta, 2016).
In the metal, mineral and ore extraction regions of India, IR lost revenue due to short-sighted railway divisions and unscrupulous manipulation of interchanging the classification of mineral ore and metal commodities. The good which was to be billed for export with higher tariff was manipulated as "meant for domestic consumption" with lower tariff.

Accounting practices and cover-up of losses
Till 2016, IR used to practice cash basis of accounting for revenue recognition. Cash basis accounting was considered a good practice of internal control over financial reporting structure (Tysiac, 2017) in a bureaucratic organization with paper based manual accounting system. However, from the fiscal year 2017-18, in a significant accounting policy intervention, IR switched to the accrual basis of accounting from the cash basis of accounting (Manasi, 2016;Krishnan, 2014). Accrual-basis of accounting (Jensen, 2016) are the global benchmark for public sector accounting which enables government to factor long term significant liabilities, such as employee pension, loans, assets, plant & machinery and investments leading to a comprehensive statement of government's financial position. Change management of adoption and implementation of the accrual-basis standards itself is a challenge (Salecha, 2018). These initiatives require extensive stakeholder support, skilled public sector accountants, supported by robust IT infrastructure and handholding by a professional accountancy organization  To sustain accounting reforms, IR will also need to align accrual-based accounting with performance costing and outcome budgeting system (Choudhary, 2019) The IR policy of using its freight business to camouflage losses from passenger business is evident with the practice of charging a premium from freight customers (Debroy &Desai, 2018).

Policy failure
Input cost on diesel fuel has been rising since 2001. This has detrimental effect on Government's import of crude oil. At exchequer's strategic control, little could be done with the fleet of 6,049 diesel locomotives consuming approximately 300 crore liters of fuel every fiscal.
Successive union governments continued to give subsidy on diesel till the year 2010 and subsequently were burdened with economic objectives. In 2012, the Government subsidy was Electronic copy available at: https://ssrn.com/abstract=3574155 INR 6.08 per liter of diesel. The successive Governments undermined economic principles and their political motives resulted into a situation where diesel fuel accounted for 40% of the government's subsidy bill (Planning Commission, 2013;First Post Editors, 2014). Diesel subsidy accounting became more difficult when cross-subsidized fare schemes (Pimpalkhare & Rawal, 2018, Kumar, Gupta & Mehra, 2018 were introduced based on principles of political sensitivity of elections rather than strategic initiatives. Freight price was increased, undermining the principles of elasticity, making IR scapegoat to the fluctuating market situations (Goyal, 2014).

RATIONAL AND RESEARCH GAP
The meta-competency (Srivastava, 2005) of a public sector organisation erodes when the focus is on distinct SBU rather than on constituent skills of its core competencies. There is sufficient research available on IR on its SBU approach, but little discourse on core  (Banerjee, 2011). For the fiscal 2019-20, IR overall capital expenditure allocation was Rs.1,58,658 crores. Accountability of the failure of public enterprise(s) is a major issue worldwide (Beeri, 2006). Even after the merging of Rail Budget into Union Budget, the dilemma for Government of India is to create capacity in transport infrastructure. The change management and the proposed avenues for investment should have been focused on dedicated freight corridors, real-estate, parking-lot services, facilitation centers (agricultural produce), rolling stocks, heavy haul track, land monetization, and, corporate restructuring. Source: Railway Board, 2017 The questions framed in this concept paper are a set of interdisciplinary study of organization development in IR. These assumptions will provide guidance to travel and logistics industry as well. The following assumptions will provide guidance to Government of India and Railway Ministry for 14 th Five Year planning:- Hypothesis 1. IR is witnessing strategic drift due to its poor control on revenue receipts and profit objectives.
 Hypothesis 2. IR has lost its distinctive competency to road sector in India.
 Hypothesis 3. IR must delegate management of commercial exploitation of its land rights and ancillary services to Zonal Divisions.
Electronic copy available at: https://ssrn.com/abstract=3574155 The Zonal Divisions of IR operate through bureaucratic hierarchy. There is a lack of ownership in the cost-center approach in balancing the employee benefits, service standards and social obligation such as hospitals/schools. This paper does not discuss these social aspects of IR in this strategy discourse.

OBJECTIVES OF THIS STUDY
After the literature review and scanning of IR environment, the primary motivation of this concept paper is to prepare a literature gap on strategic architecture in the forthcoming 14 th Five Year Plan (2022-27). Through a detailed historical analysis on IR, a theoretical diagnosis report on its failure to retain competitive advantage is proposed for review by practitioners and scholars. Thus, this paper provides a comprehensive literature on competencies of railway sector in BRICS countries. Second, the strategic architecture advocates discarding the constituent skills that do not result in competitive advantage of IR. This paper guides in conditioning the metacompetency of IR through developing and pruning of its constituent skills. This objective critically examines a set of turnaround management strategies (Boyne, 2006;Beeri, 2012) that will answer the planning and controls required for capacity augmentation of rolling stocks vis-à-   Electronic copy available at: https://ssrn.com/abstract=3574155

DISCUSSION
Integration of administration and control between various surface transport departments of the Government is an issue for strategic control. For the holistic contribution of the transport sector in India's economic growth, this paper advocates for mobilizing organizational restructuring (Gangwar & Raghuram, 2017)   Road transport sector is a clear choice of economy with its share of 3.06% in India's GVA for 2017-18, as compared to IR contribution of meagre 0.75% (Economic Survey, 2018). The dependency of road transport in India's economy is not sustainable because of very high amount of greenhouse gas (GHG is 160 Gram/ton kilometer) emissions from road freight transport. The GHG emission for rail freight is 29 gram/tone kilometer and shipping transport is 31 gram/tone kilometer. As of 2006, the share of Inland Waterways in India's total cargo capacity was lowest at 0.4% in comparison to 5.6% of the EU, 8.7% of China and 8.3% of USA. The government and the policymakers need to make their strategic choice of transport mix aligned with the environmental commitment 2030 of Paris Agreement (Kumar & Naik, 2019). IR has little learning on the conventional life-cycle analysis (Facanha & Horvath, 2006;Kalluri et al., 2016) practices to evaluate and invest its strategic transport mix. This transport mix is based on the overall environmental impacts, GHG emissions (Scheepmaker, Pudney, Albrecht, Goverde & Howlett, 2020), project overrun in infrastructure projects, as well as maintenance of inter-modal transport capacity. To mitigate the environmental impact (Merchan, Belboom & Léonard, 2015) of infrastructure capacity expansion, IR needs to qualify the perennial challenges and contributing activities throughout the project-life-cycle. An acceptable and moderated benchmark on GHG emission cost, environmental impact needs to be modeled for IR in compared to its peers in China, Europe, USA and Russia. This strategic niche management will pave learning path for the policy makers with its preferred project alternatives in developing new multi-modal infrastructure for surface transportation. IR strategy architecture is discussed below.
Electronic copy available at: https://ssrn.com/abstract=3574155 5.1 Ease of doing business and transparency: Investment in different logistic functions in varying degree needs to be streamlined in the IR through private sector participation, corporate collaboration, and ease of doing business. The share of private infrastructure investments in the economy was 50-60 percent for the 12 th Five-year plan (2012-17). To meet the ambition of 100% FDI in high speed train projects such as Beijing-Shanghai highspeed railway (Yan, Li & Han, 2019), dedicated freight corridors, rolling stock, electrification, signaling systems, freight terminals, passenger terminals, infrastructure in industrial parks and, mass rapid transport systems (MRTS), IR will require significant organizational restructuring supported by top-down change management approach. The investment will be critical in public-private partnership models (Cheng, Wang & Xiong, 2020) in railways as well as in containerization. Automated container terminals and transportation systems (Günther & Kim, 2005) will be standard operating procedure in India for the next 20 years. To develop IR containerization as best practice in inbound international logistics, it will require expansion in container traffic with intermodal xv connectivity (Rodrigue, Comtois & Slack, 2017) supported by a network of dry ports. Transportation interoperability will be SOP in the 14,500 km route through inland waterways & coastal shipping, hub-and-spoke distribution network (Haralambides, 2019), relay (Ali, Radhakrishnan, Pulat & Gaddipati, 2002) and the last-mile delivery through road transport from IR depots/warehouses. Facilitating ease of doing business by generalizing the operational specifications of coastal ships and vessels is a welcome step from the Government. After reviewing the strategic initiatives of China and Russia in the beginning of the millennium, it is seen that IR was nowhere in the transformation. Having missed its opportunity to transform 20 years ago, IR has limited options to react to strategic choices Electronic copy available at: https://ssrn.com/abstract=3574155 except for the capacity expansion. Integrated supply chain (George & Rangaraj, 2008) is a mantra for IR's clients and its prospective verticals for reducing logistics cost in inbound and outbound transportation (Raghuram & Gangwar, 2007). It has a leadership role in working seamlessly with actors in logistic solutions for the last-mile delivery and in cutting down the holding cost for cement, dairy, perishable food and cold supply chain. Reducing time to reach the consumption points and inbound supply chain sources is critical for cement, dairy, short shelf-life and cold supply chain products (Kumar, Chibuzo, Garza-Reyes, Kumari, Rocha-Lona & Lopez-Torres, 2017). The proposed investment of INR 2000 crores for hinterland connectivity will boost the multi-modal logistics objective of the pro-industry government at the heart of its mission Make-in-India program xvi . However, how good or worse India's political leadership in creating an environment conducive for PPP and FDI in the transport infrastructure is indicated with volume of private investments and PPP revenue models. With an objective to sustain a 60%-70% contribution from PPP model in the 13 th Five-year plan (2017-22), transparency in transport reforms, cross-subsidising of passenger tariff, fiscal discipline, and tough call for pruning unsustainable railways freight tariffs is already in practice, though investment ecosystem is not in sync with port superstructures (Kavirathna, Kawasaki, Hanaoka & Matsuda, 2008) in India.

5.2
Deregulation of capital expenditure investment in 13 th Five Year plan: The capital investment targeting rolling stocks has to be regulated by a corporation or an authority incorporated by the Government. Since, both the ministerial and commercial powers are vested with the Railway Board, separation of the regulatory & policy roles from the commercial activity will be an essential decision for private sector participation and Electronic copy available at: https://ssrn.com/abstract=3574155 organizational control (Raghuram, 2002). To mitigate the conflict of interest, the exclusivity of the Directors to Railway Board is to be reserved without any political nomination or recommendation. On accounting practices, the accrual basis of accounting for revenue recognition is a short-term smoke screen. Contrarily, cash-based revenue recognition compliance improves internal control over financial reporting structure (Tysiac, 2017), but there could be perceived conflict of interests (Nwogugu, 2011), political mileage (Mitchell, 2011), and, vested interest of econo-political mileage (Sriraman, 2000). Focus on urban projects on MRTS in metro cities (Kadam & Bandyopadhyay, 2019) and A & B tier-cities will invite private participation for franchised intercity train services (Stead, Wheat, Smith & Ojeda-Cabral, 2019). The risk of latent demand and mispriced congestion (Arnott & Small, 1994) in MRTS may need surgical intervention by city planners. Urban road traffic congestion control is proven practice through increasing the capacity of MRTS such as the urban metro railroad. Switching of personal road transport to MRTS may not realize immediate revenue and usage volume due to the commuter's motivation to restrict change, rush hour time and cost per trip. However, the policy of deregulating the price of High-Speed-Diesel and Petrol fuels, the short term subsidy offered in the MRTS investment and high cost of right-of-way will make it unsuitable in terms of the cost borne by urban planning initiatives under the Jawaharlal Nehru National Urban Renewal Mission (Sreyan, 2013). Dawei, Myanmar, and optical fiber link of Moreh-Mandalay are ground breaking investment, essential (Bhattacharyya & Chakraborty, 2010) to this intermodal capacity. However, this intermodal capacity may not be commercially viable for Northeast Frontier Railways due to factors like low volume of international trade and challenging geographical terrain. Northeast Frontier Railways may optimize heavy haul xvii corridor  considering the demand patterns, fleet size, and terminal facilities. It is a high time for IR to take a call to stop or stall the uneconomic freight routes of Northeast Frontier Railways (Dutta, 2018). Instead, as a strategic niche initiative, Northeast Frontier Railways must start the logistic mix of intermodal connectivity and infrastructure investment through venturing into inland water transport connectivity. This strategy will aim into seamless policy of maritime/land interface with Bangladesh (Notteboom & Rodrigue, 2008). For the optimization of warehousing facilities in the manufacturing clusters, a strategic mix of intermodal transportation, port regionalization, and maritime/land interface is needed. As a best practice in Brazil, Russia, China and North America, port regionalization is serving to optimize route capacity by reducing congestion and provide dynamic access to the hinterland with rail freight. Similarly, the intermodal-transport capacity of North Eastern India with Myanmar, Bangladesh, and Thailand will serve long-distance trade corridors of ASEAN and Far East markets.
Intermodal transport will not only provide access to the manufacturing clusters in the hinterland but leverage the port capacity to support export logistic function of the landlocked North Eastern India. The constraint in this strategy implementation is the longer distance due to geographical terrain, and exclusivity of transportation networks that have developed in the last two hundred years. One of the IR cold supply chain innovation is its milk tankers. IR has made transportation of milk possible by maintaining a temperature control of 04 degrees Electronic copy available at: https://ssrn.com/abstract=3574155 Celsius. These specialized milk containers/wagons are attached to express trains that perform intercity (1-2 hours of distance) travel at a maximum speed of 110km/h. This know-how is significant opportunity for IR because road transport de-facto controls the end-to-end cold supply chain in India. India has around 40,000 refrigerated trucks engaged in cold SCM operating from factory gate to stockless depots. These trucks require constant energy for refrigeration. They cannot match the long-distance hauls of IR. This capacity gap in cold SCM needs immediate attention to tap freight business opportunity arising from fresh organics vegetable produce, flowers, fresh water fish, poultry and perishable beverages. IR needs to invest in skilled human resource capacity (Bag, 2016) for cold SCM and mitigate constraints of non-recyclable packaging, reverse logistics, cold storage infrastructure, and technology obsolescence. In future, green logistics may open up an opportunity for India's commitment to environment. To support with investment ecosystem, Government needs to open 100% FDI in B2C in groceries and cold SCM. India's share in fresh farm export is only 1% in the world (Miller, 2016). This is a gross mismatch of strategy outlay because farm & horticulture sector of India has a north side production of fruits & vegetables. Though India is a vast dairy country, about 40% of its milk production goes through distressed sale due to inadequate cold SCM infrastructure. Mixed-integer linear programming (Touil, Echchatbi & Charkaoui, 2016), multi objective vehicle routing solution (Gallo, Accorsi, Baruffaldi & Manzini, 2017) is to be augmented in the existing cold chain network configuration (Raut, Gardas, Narwane & Narkhede, 2019). The integrated components of this cold supply chain are the farmers, orchards, processing centers, secondary packaging units, distributors, storage or consolidation nodes where these products are conserved, stored and consolidated for primary distribution with a short shelf life. All these activities take place ahead of multi-modal transportation followed by demand nodes (Govindan, Fattahi & Keyvanshokooh, 2017) where the short shelf life food products meet consumption points.

5.4
Capitalize land rights and Right-of-Way available with IR: IR has paved the way for collaboration in non-core operations (Sood, 2017). With ancillary service operation of IR in retail food stalls, retiring rooms, power, platform maintenance, it has initiated a pilot initiative in inviting private investment. The commercial rights of parking-lot facility of Habibganj railway station in the city of Bhopal in Madhya Pradesh is lease to a private contractor. Thus in future, collaboration will be possible in the core operations as well. Some other projects with private participation in ancillary service operations are Anand Vihar and Bijwasan stations in New Delhi, Chandigarh and Mohali railway stations in Punjab state, and, Gandhinagar and Surat stations in Gujarat state. To facilitate PPP in urban rail development, the critical factors are streamlined approval process, transparency in bidding (Gupta, Prakash & Jadeja, 2015), and contracting process. This is only possible with strong leadership in its Zonal Division who can implement tactical changes in the operation level of IR. This change is not possible in the present state of affair of IR. It will need organizational restructuring focusing on innovation and collaboration in government subsidizing scheme with appropriate risk allocation (Liu & Wilkinson, 2013). IR goal of land monetization from 400 stations needs a model based on factors and variables of demand/revenue generation potential, financial risks, reclaim land from encroachment, rehabilitation risks, debt servicing risk (Singh & Kalidindi, 2009), delay in financial closure (Babatunde & Perera, 2017;Leigland, 2018), geographical & locational risk, and project completion risk (Baruah & Kakati, 2016). IR can capitalize based on the demand of upstream and downstream Oil & Gas vertical by utilizing its right-of-way and laying of pipeline transport network Electronic copy available at: https://ssrn.com/abstract=3574155 (Mukherjee, 2014). This diversification into pipeline business will need thorough environmental impact assessment and anticipating of hazardous risk of spilling & transportation accidents (Wiseman, 2016, Xu, Zhang, Li, Skitmore, Yang & F, 2019. The Construction and Open Line departments of IR are required to reshuffle their organization structure to accommodate SCADA 6 solution for pipeline operation & maintenance (Arora & Banerjee, 2012). The sharing of RailTel network to Central Railside Warehouse Corporation is a pioneering initiative for Railside Warehousing facility in 20 major business hubs of India. IR land monetization asset is in the retail business district of the cities. Streamlining of GST has paved way for railways to leverage almost every city/town with Central Railside Warehouses. Political ambition of Bhartiya Janata Party (Nilsen, 2018) and its allied partners in doubling the income of farmers may see the light of the day with control on distressed selling through e-Rashtriya Kisan Agri Mandi (Press Trust of India, 2017).

CONCLUSION
IR needs to diversify its business verticals and adopt a strategic business unit in its organization structure. In the 14 th Five-year plan, human resource capacity of IR (Pereira, Fontinha, Budhwar & Arora, 2018) along with project management skills is to be focused in its subsidiaries venturing into international bidding for critical railway projects, suburban railway transport (Acharya, 1997) Union Government approved US$15 billion project proposal of Japan to build high-speed railway of maximum speed of 320 kmph between Mumbai and Ahmedabad. The project is expected to be completed by 2022 and operationalise in 2023. Under ideal condition, this HST will take 180 minutes between Ahmedabad and Mumbai with cheaper cost than air travel. xiii Ministry of Shipping mobilized National Waterways Act, 2016 enabled 111 National Waterways for inland water transport. The NW network covers around 20,275.5 km. xiv Maritime transport in India is serviced by 12 major ports, 200 notified minor and intermediate ports in the coasts of states and Union Territories. In 2015, Ministry of Shipping proposed a strategic and customer-oriented US$120 billion programme called Sagarmala. Sagarmala comprises of setting up of new ports, modernization of existing ports, development of 14 Coastal Economic Zones and Coastal Economic Units, linking road rail connectivity, multi modal logistics systems, pipelines, inland waterways and coastal community development.
xv Intermodal is a cargo practice where all areas of the transport chain is integrated such that inland vessels, ships, port terminals, trucks and trains are adapted to handle the same set of containers with standards of ISO 28000:2007 or security management of supply chain. xvi Make in India is a localised manufacturing & export oriented initiative of National Democratic Alliance led Government mission launched in 2014. To implement this mission, 100% Foreign Direct Investment was permitted in 23 sectors. xvii Heavy haul railways should either be capable of 8000 tones and above with axle load up to 27 tones and above or freight volume is more than 40 Metric tons on distance longer than 150km.