Though it is not clear what action the government will finally take following the arrest of the railway minister’s nephew in trying to fix a posting in the Railway Board, it is obvious the Railways’ faulty procurement policy is at the heart of the problem. The Railways make over R20,000 crore of procurement each year, and if the Vinod Dhall report on public procurement policy is anything to go by, the system is very opaque. With the Railways allowing bidding only by empanelled companies, the empanelment process has wily-nilly become a big bottleneck and, as a result of this, there are often a very small number of suppliers left in the fray for most bids. Indeed, when there was a proposal to bring in private manufacturers of different engines, the Dhall report noted, the Railways’ bureaucracy managed to scuttle the process – and this is despite the fact that in one case the bid received was lower than the cost at which the Railways imported the engines. Citing an example, the panel said the Diesel Locomotive Works at Varanasi continues to import 35% of components, despite signing a technology transfer agreement with EMD in 1997. Though the Dhall committee report was submitted in 2011, the final Bill on this has not yet got converted into a public procurement Act.
It is hardly surprising, then, that around half the complaints received by the CVC over the last few years pertain to the Railways.