Indian Railways getting future ready

The Economic Times
26 February 2016

Mr. Debu Bhattacharya, Managing Director, Hindalco and Vice Chairman – Novelis (Aditya Birla Group) expresses his views on the Railway Budget 2016

With a strategy to win back the lost market share, cost optimisation efforts in the face of a weak patch in the business cycle, and organisational initiatives to prioritise investment projects, one could have easily mistaken it to be a corporate business plan.

Today's Railway Budget was indeed corporate-like, clinically focused on the issues that are afflicting Indian Railways, the world's fourth largest rail network. Over the last few decades, railways was losing its competitiveness to alternate modes of goods transport due to high freight rates and congestion on most of the busy routes.

The Budget has started a journey to reverse that trend through its announcements of review of the freight tariff structure, direct long term freight negotiations with key partners and focus on improving connectivity to ports and speed of freight movement. That bodes well both for the industry and the railways.

Container trains with time table will be started on a pilot basis, which is the starting point of ensuring that freight trains also get equal priority as passenger trains.

Dedicated freight corridors, private freight terminals, opening of new siding, are well on track and the general direction of focus on projects seemed to be very strong.

The Minister has done a good job of keeping the Operating Ratio at 92% even with a large increase in the wage bill due to the Seventh Pay Commission.

Many innovative methods to reduce cost have been proposed, including significant energy savings in power and diesel. Also, significant non-tariff revenues are being targeted. The Budget appears to be focused on investments for future capacity building, helped by a generous term funding by LIC.

Overall, it was a very customer and service oriented Budget, keeping a keen eye on balancing ends with means.

Not ready for RCS
As for Google's Rich Communications Services (RCS) universal messaging initiative, Kapania said Idea is not very keen on participating in it since unlike its global peers it cannot bundle voice and data.

If Idea opts out, it will be the only Indian GSM player among the top three to skip the initiative, which already has on board Bharti Airtel and Vodafone, and other global telecom majors like Orange, Deutsche Telekom, Sprint and Etisalat.

The RCS is a new standard for carrier-based messaging that will enable group chats and high-resolution photo-sharing on Android devices. Since mobile messaging has reportedly been falling behind modern messaging apps such as WhatsApp, Hike, WeChat, Viber and Telegram globally, the RCS is aimed at recovering lost ground. GSMA, which has been promoting RCS since 2008, said telecom operators in general have agreed to move towards a single universal profile based on the RCS standard, which is essentially an improved version of the existing SMS and MMS standards. "We see that our global peers bundle voice and data such that if you were to buy the service without one of the two, the price wouldn't be very different. But in India, we have to sell voice, then data, and then content. This is the reason we don't want to participate," said Kapania.

However, Kapania said, Indian operators should also start bundling, because "if we bundle, then we too can cross subsidise services; overall they will all get cheaper".

Globally, telecom companies are buying content, or rights, or getting into partnerships, to increase consumption, and they are all sold together." That is why they are not afraid of 5G or Internet of Things," he said.

At the MWC, Indian operators were awarded for putting up 800 million connections for Mobile Connect, a service that proposes to c;reate a registration ID based on the mobile number.