Safety has been one of the biggest concerns in the Indian Railways system. While the number of accidents have gone down over the last few years, the number still remains over 100 accidents a year. In light of the recent train accidents in Uttar Pradesh (UP), we present some details around accidents and safety in the Indian Railways.
Causes of rail accidents
The number of rail accidents has declined from 325 in 2003-04 to 106 in 2015-16.[1] The number of rail accidents as per the cause are shown in the graph below. In 2015-16, majority of the accidents were caused due to derailments (60%), followed by accidents at level crossings (33%).1 In the last decade, accidents caused due to both these causes have reduced by about half. According to news reports, the recent railway accidents in UP were caused due to derailment of coaches.
Derailments
Between 2003-04 and 2015-16, derailments were the second highest reason for casualties.2 The Standing Committee on Railways, when examining the safety in railways, had noted that one of the reasons for derailments is defect in the track or coaches. Of the total track length of 1,14,907 kms in the country, 4,500 kms should be renewed annually.2 However, in 2015-16, of the 5,000 km of track length due for renewal, only 2,700 km was targeted to be renewed.2 The Committee had recommended that Indian Railways should switch completely to the Linke Hoffman Busch (LHB) coaches as they do not pile upon each other during derailments and hence cause lesser casualties.2
Un-manned level crossings
Un-manned level crossings (UMLCs) continue to be the biggest cause of casualties in rail accidents. Currently there are 14,440 UMLCs in the railway network. In 2014-15, about 40% of the accidents occurred at UMLCs, and in 2015-16, about 28%.2 Between 2010 and 2013, the Ministry fell short of meeting their annual targets to eliminate UMLCs. Further, the target of eliminating 1,352 UMLCs was reduced by about 50% to 730 in 2014-15, and 820 in 2015-16.2 Implementation of audio-visual warnings at level crossings has been recommended to warn road users about approaching trains.2 These may include Approaching Train Warning Systems, and Train Actuated Warning Systems.2 The Union Budget 2017-18 proposes to eliminate all unmanned level crossings on broad gauge lines by 2020.
Casualties and compensation
In the last few years, Railways has paid an average compensation of Rs 3.03 crore every year for accidents (see figure below).[2]
Note: Compensation paid during a year relates to the cases settled and not to accidents/casualties during that year.
Consequential train accidents
Accidents in railways may or may not have a significant impact on the overall system. Consequential train accidents are those which have serious repercussions in terms of loss of human life or injury, damage to railway property or interruption to rail traffic. These include collisions, derailments, fire in trains, and similar accidents that have serious repercussions in terms of casualties and damage to property. These exclude cases of trespassing at unmanned railway crossings.
As seen in the figure below, the share of failure of railways staff is the biggest cause of consequential rail accidents. The number of rail accidents due to failure of reasons other than the railway staff (sabotage) has increased in the last few years.
Accidents due to failure of railway staff
It has been noted that more than half of the accidents are due to lapses on the part of railway staff.2 Such lapses include carelessness in working, poor maintenance, adoption of short-cuts, and non-observance of laid down safety rules and procedures. To address these issues, conducting a regular refresher course for each category of railway staff has been recommended.2
Accidents due to loco-pilots2,[3]
Accidents also occur due to signalling errors for which loco-pilots (train-operators) are responsible. With rail traffic increasing, loco-pilots encounter a signal every few kilometres and have to constantly be on high alert. Further, currently no technological support is available to the loco-pilots and they have to keep a vigilant watch on the signal and control the train accordingly.2 These Loco-pilots are over-worked as they have to be on duty beyond their stipulated working hours. This work stress and fatigue puts the life of thousands of commuters at risk and affects the safety of train operations.2 It has been recommended that loco-pilots and other related running staff should be provided with sound working conditions, better medical facilities and other amenities to improve their performance.2
Actions taken by Railways with regard to the recent train accident
According to news reports, the recent accident of Utkal Express in UP resulted in 22 casualties and over 150 injuries.[4] It has also been reported that following this incident, the Railways Ministry initiated action against certain officials (including a senior divisional engineer), and three senior officers (including a General Manager and a Railway Board Member).
The Committee on Restructuring of Railways had noted that currently each Railway zone (headed by a General Manager) is responsible for operation, management, and development of the railway system under its jurisdiction.[5] However, the power to make financial decisions does not rest with the zones and hence they do not possess enough autonomy to generate their own revenue, or take independent decisions.5
While the zones prepare their annual budget, the Railway Board provides the annual financial budget outlay for each of them. As a result of such budgetary control, the GM’s powers have been reduced leaving them with little independence in planning their operations.5
The Committee recommended that the General Managers must be fully empowered to take all necessary decisions independent of the Railway Board.5 Zonal Railways should also have full power for expenditure and re-appropriations and sanctions. This will make each Zonal Railway accountable for its transport output, profitability and safety under its jurisdiction.
Under-investment in railways leading to accidents
In 2012, a Committee headed by Mr. Anil Kakodkar had estimated that the total financial cost of implementing safety measures over the five-year period (2012-17) was likely be around Rs one lakh crore. In the Union Budget 2017-18, the creation of a Rashtriya Rail Sanraksha Kosh was proposed for passenger safety. It will have a corpus of Rs one lakh crore, which will be built over a five-year period (Rs 20,000 crore per year).
The Standing Committee on Railways had noted that slow expansion of rail network has put undue burden on the existing infrastructure leading to severe congestion and safety compromises.2 Since independence, while the rail network has increased by 23%, passenger and freight traffic over this network has increased by 1,344% and 1,642% respectively.2 This suggests that railway lines are severely congested. Further, under-investment in the sector has resulted in congested routes, inability to add new trains, reduction of train speeds, and more rail accidents.2 Therefore, avoiding such accidents in the future would also require significant investments towards capital and maintenance of rail infrastructure.2
Tags: railways, safety, accidents, finances, derailment, casualty, passengers, train
[1] Railways Year Book 2015-16, Ministry of Railways, http://www.indianrailways.gov.in/railwayboard/uploads/directorate/stat_econ/IRSP_2015-16/Year_Book_Eng/8.pdf.
[2] “12th Report: Safety and security in Railways”, Standing Committee on Railways, December 14, 2016, http://164.100.47.193/lsscommittee/Railways/16_Railways_12.pdf.
[3] Report of High Level Safety Review Committee, Ministry of Railways, February 17, 2012.
[4] “Utkal Express derailment: Four railway officials suspended as death toll rises to 22”, The Indian Express, August 20, 2017, http://indianexpress.com/article/india/utkal-express-train-derailment-four-railway-officers-suspended-suresh-prabhu-muzaffarnagar-22-dead-4805532/.
[5] Report of the Committee for Mobilization of Resources for Major Railway Projects and Restructuring of Railway Ministry and Railway Board, Ministry of Railways, June 2015, http://www.indianrailways.gov.in/railwayboard/uploads/directorate/HLSRC/FINAL_FILE_Final.pdf.
At noon today, the Finance Minister introduced a Bill in Parliament to address the issue of delayed debt recovery. The Bill amends four laws including the SARFAESI Act and the DRT Act, which are primarily used for recovery of outstanding loans. In this context, we examine the rise in NPAs in India and ways in which this may be dealt with.
I. An overview of Non-Performing Assets in India
Banks give loans and advances to borrowers which may be categorised as: (i) standard asset (any loan which has not defaulted in repayment) or (ii) non-performing asset (NPA), based on their performance. NPAs are loans and advances given by banks, on which the borrower has ceased to pay interest and principal repayments. 
In recent years, the gross NPAs of banks have increased from 2.3% of total loans in 2008 to 4.3% in 2015 (see Figure 1 alongside*). The increase in NPAs may be due to various reasons, including slow growth in domestic market and drop in prices of commodities in the global markets. In addition, exports of products such as steel, textiles, leather and gems have slowed down.[i] The increase in NPAs affects the credit market in the country. This is due to the impact that non-repayment of loans has on the cash flow of banks and the availability of funds with them.[ii] Additionally, a rising trend in NPAs may also make banks unwilling to lend. This could be because there are lesser chances of debt recovery due to prevailing market conditions.[iii] For example, banks may be unwilling to lend to the steel sector if companies in this sector are making losses and defaulting on current loans. There are various legislative mechanisms available with banks for debt recovery. These include: (i) Recovery of Debt Due to Banks and Financial Institutions Act, 1993 (DRT Act) and (ii) Securitisation and Reconstruction of Financial Assets and Security Interest Act, 2002 (SARFAESI Act). The Debt Recovery Tribunals established under DRT Act allow banks to recover outstanding loans. The SARFAESI Act allows a secured creditor to enforce his security interest without the intervention of courts or tribunals. In addition to these, there are voluntary mechanisms such as Corporate Debt Restructuring and Strategic Debt Restructuring, which These mechanisms allow banks to collectively restructure debt of borrowers (which includes changing repayment schedule of loans) and take over the management of a company.
II. Challenges and recommendations for reform
In recent years, several committees have given recommendations on NPAs. We discuss these below.
Action against defaulters: Wilful default refers to a situation where a borrower defaults on the repayment of a loan, despite having adequate resources. As of December 2015, the public sector banks had 7,686 wilful defaulters, which accounted for Rs 66,000 crore of outstanding loans.[iv] The Standing Committee of Finance, in February 2016, observed that 21% of the total NPAs of banks were from wilful defaulters. It recommended that the names of top 30 wilful defaulters of every bank be made public. It noted that making such information publicly available would act as a deterrent for others.
Asset Reconstruction Companies (ARCs): ARCs purchase stressed assets from banks, and try to recover them. The ARCs buy NPAs from banks at a discount and try to recover the money. The Standing Committee observed that the prolonged slowdown in the economy had made it difficult for ARCs to absorb NPAs. Therefore, it recommended that the RBI should allow banks to absorb their written-off assets in a staggered manner. This would help them in gradually restoring their balance sheets to normal health.
Improved recovery: The process of recovering outstanding loans is time consuming. This includes time taken to resolve insolvency, which is a situation where a borrower is unable to repay his outstanding debt. The inability to resolve insolvency is one of the factors that impacts NPAS, the credit market, and affects the flow of money in the country.[v] As of 2015, it took over four years to resolve insolvency in India. This was higher than other countries such as the UK (1 year) and USA (1.5 years). The Insolvency and Bankruptcy Code seeks to address this situation. The Code, which was passed by Lok Sabha on May 5, 2016, is currently pending in Rajya Sabha. It provides a 180-day period to resolve insolvency (which includes change in repayment schedule of loans to recover outstanding loans.) If insolvency is not resolved within this time period, the company will go in for liquidation of its assets, and the creditors will be repaid from these sale proceeds.
[i] ‘Non-Performing Assets of Financial Institutions’, 27th Report of the Department-related Standing Committee on Finance, http://164.100.47.134/lsscommittee/Finance/16_Finance_27.pdf. [ii] Bankruptcy Law Reforms Committee, November 2015, http://finmin.nic.in/reports/BLRCReportVol1_04112015.pdf. [iii] Volume 2, Economic Survey 2015-16, http://indiabudget.nic.in/es2015-16/echapter-vol2.pdf. [iv] Starred Question No. 17, Rajya Sabha, Answered on April 26, Ministry of Finance. [v] Report of the Bankruptcy Law Reforms Committee, Ministry of Finance, November 2015, http://finmin.nic.in/reports/BLRCReportVol1_04112015.pdf. *Source: ‘Non-Performing Assets of Financial Institutions’, 27th Report of the Department-related Standing Committee on Finance, http://164.100.47.134/lsscommittee/Finance/16_Finance_27.pdf; PRS.
