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8 April 2017 Editorial

 

8 APRIL 2017

Track to efficiency

On creating a Rail Development Authority

Creating a Rail Development Authority for India is among the most significant reforms to an infrastructure system undertaken by the government. The railways connect the country's far corners and act as a driver of the economy. High rates of economic growth have raised the demand for travel, but this remains largely unmet. The popular aspiration is for a modern system that offers high-quality travel with low risk of accidents, while industry wants smooth freight transfer. An independent, empowered regulator could be the paradigm shift that is needed. The proposed Authority would have to ensure that the resources of the system are optimally utilised, overcoming existing inefficiencies that arise from the fact that policy, regulatory and management functions of the railways are intertwined. As the National Transport Development Policy Committee noted in 2014, the centralisation of all functions in the Railway Board has proved detrimental to the organisation's growth, particularly at a time when there is a need for massive investment in infrastructure for 7%-plus GDP growth. Conversely, robust economic expansion further raises the demand for railway services. To reconcile this, the regulator has to identify sectors that can support higher tariffs and also produce greater volumes of traffic. Such accurate interventions are critical if the trend of declining rates of growth in railway freight revenues and volumes, which set in during 2011-12, is to be reversed.

One of the big challenges before the Centre is to facilitate higher non-budgetary investment in the railways. The Bibek Debroy Committee found the private sector is discouraged from participating more effectively due to a monopolistic framework. Coming up with a system that de-risks private investment and creates a level playing field are among the major challenges before the Rail Development Authority. In the area of passenger services, this offers several possibilities; the railways cater to some 23 million passengers a day in a network of about 8,000 stations. The experience of consumers in cities shows that use of information technology to deliver traditional services can lead to higher levels of efficiency and lower costs, besides adding jobs. While regulation of tariffs matching the quality of travel can help raise revenues, the system should be able to move both people and freight faster in order to grow. Inducting faster, more comfortable trains on 500 km-plus inter-city routes would attract new traffic, and help operate cheaper passenger trains to interior areas, as part of the government's social obligation. Technology upgrades are essential to raise carrying capacity, service frequency and speeds. Rail reform is complex and what was undertaken in Europe during the 1990s, separating infrastructure from operations, is an interesting model: sequential measures achieved sustainable results, rather than a package of changes introduced at once.


His Mugabe moment?

On the backlash to President Jacob Zuma's power grab

South African President Jacob Zuma may not have anticipated the strength of the backlash when he decided last week to dismiss his much-respected Finance Minister, Pravin Gordhan, and various other colleagues in a ministerial shuffle. On Friday, thousands of South Africans demonstrated peacefully across cities against Mr. Zuma's action, which appears to have triggered concerns about government corruption and a tottering economy. Even ailing Nobel laureate Desmond Tutu made an appearance in support of the protesters, most of whom called for President Zuma to resign. Adding to the woes of the weakening South African economy, the rand fell immediately by more than 2%. Yet the prospect of Mr. Zuma stepping down appears unlikely. His cabinet clear-out is widely considered to be an attempt to control the selection of his successor in the African National Congress, which swept to power in 1994 under Nelson Mandela. Far from those glory days, the ANC today is split over the question of support for Mr. Zuma. Deputy President Cyril Ramaphosa described the move as "totally, totally unacceptable", and ANC general secretary Gwede Mantashe said the ministerial shake-up made him "jittery and uncomfortable". Although Mr. Zuma's government has been tainted by corruption scandals, he has granted himself more room for manoeuvre by moving Malusi Gigaba from the Home Affairs Ministry to Finance, despite the latter's limited financial experience.

More troubling than the immediate question of Mr. Zuma's control over the presidency and the ANC, however, is the fact that he presides over what seems to be a secular decline in the quality of governance and institutional integrity in South Africa. Last year the party suffered key losses in municipal elections, and Mr. Zuma was forced, by a Constitutional Court ruling, to reimburse public monies in a dispute over millions of dollars he allegedly spent on his private home. Since its early post-apartheid years, South Africa enjoyed the benefits of a strong constitutional ethos and a vibrant civil society. Yet it may be nearing what some analysts consider its "Mugabe moment", a reference to neighbouring Zimbabwe, where a predatory state lines the pockets of the elites. The fact that Mr. Zuma portrayed the sacking of Mr. Gordhan as promoting "transformation" has a familiar echo in the tendency of Zimbabwean President Robert Mugabe to use the race card and project rent-seeking moves as necessary reforms for the deprived masses. If South Africans wish to place the country on a stable path to prosperity, they need to do more than seek the ouster of Mr. Zuma, for he has already laid the foundations for his ex-wife to take the reins of power. They need a second revolution aimed at discovering the kind of leadership that puts people first.

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