THE PORTER ECONOMY, The Great Railway Bazaar

THE PORTER ECONOMY, The Great Railway Bazaar

Mayank Singhal
Businessworld Magazine, 8-15 Sep 2003

Entrepreneurship, acquisitions, investment decisions... you will find examples of these in the oddest of places. Sure, they happen a lot in your normal corporate arena - but they also happen in street corners, in scrap yards, even in your railway station. In the New Delhi railway station, a porter's licence can command a price of over Rs 2,00,000. Take a break from your normal work for a tour of the Indian Railway station, a classic example of the Licence Raj economy.by Mayank Singhal

PORTERS2.jpg (13192 bytes)"Do lakh rupaiye". Two lakh rupees. Hargun Singh, badge number 233, pauses infinitesimally to savour my expression when he drops that figure before carrying on with the conversation. No, he doesn't plan to transfer his Hazrat Nizamuddin railway station porter's licence anytime soon. But if - because of some unforeseen circumstances - he is forced to transfer his licence, he expects to get Rs 200,000 for it.

But then, he reiterates, he isn't planning on transferring it anytime soon. Life as an Indian Railways' licensed porter is pretty good. He acquired his licence in 1998, the last time the Delhi division of Indian Railways was recruiting porters. (The Delhi division initiated a new recruitment drive for porters in 2002, but the process hasn't been completed yet.) He had heard about the 'vacancies' from his uncle, another licensed porter. He estimates that there were 10,000 applicants who had applied for the 45 vacancies - all in the Nizamuddin station. The recruitment process took two whole months, but was worth it. He was an electrician in an electrical shop before he got his licence and he earned Rs 1,500 a month there. The hours were long and there was nothing much to look forward to. His 'job' now is infinitely better. On good days, he manages to take home over Rs 250. On even average days, he nets Rs 150. The timings are great - he lands up at 10 a.m. at Nizamuddin station and leaves for home by 4 p.m. Between trains, there is lots of free time. And there's no one to hassle him. Also, there are the perks that he is entitled to by virtue of being a licensed porter.

Hargun Singh plans to work as a coolie till he grows too old to carry loads. And then he will transfer his licence. It will be worth a lot more by then... much, much more than the Rs 200,000 it fetches today.

A porter's licence for any Indian railway station is granted on the behalf of no less a person than the President of India. Once selected, a porter is required to pay a one-time fee of Rs 10 as security deposit (refundable). And a monthly licence fee of Rs 10 (for A class stations with over 150 porters) or Rs 5 (for B class stations, with less than 150 porters) to the Indian Railways. In return for that, he is entitled to two sets of uniforms; a complimentary travel pass in a second/sleeper class from his station of work to any station in India and back, once a year; medical facilities in the outpatients department for himself and his family in the Railways hospital of his station; free use of his station's waiting halls, canteens, latrines and, in some cases, the porter's rest house (the coolie shelter); free education for his children at a Railways school, if there are seats vacant, and a few other things.

Above all, the licence is granted for perpetuity. And it is transferable - under certain circumstances. It is this last privilege that is the most interesting. Simply because a porter's licence, for which the porter pays Rs 10 a month, can be 'sold' for an enormous premium that can run into lakhs of rupees depending on the station for which the licence has been issued.PORTERS1.jpg (13037 bytes)

Who wants to be a porter?

And why should anyone pay a couple of lakh rupees for a licence anyway? After interviewing over a dozen of Hargun Singh's colleagues and peers at the Nizamuddin, Old Delhi and New Delhi railway stations, and assorted Indian Railways officials, it became apparent that quite a lot of people were willing to pay those hefty amounts for the dubious privilege of becoming a coolie.

Take the 'job' parameters first. The licensed railway porter is not an employee of the Indian Railways - he is merely contracted by the Indian Railways to offer his services to passengers. Although the Railways are in no way obliged to provide monetary or other benefits to licensed porters, the porters are offered some facilities as a goodwill gesture. And, over the years, as the porters' union has become stronger, the perks are getting better.

Apart from the privileges already mentioned above, in 1998, the coolie became entitled to one Privilege Ticket Order (PTO). Essentially, a PTO allows a porter and his spouse to travel in a second/sleeper class from his station of work to any station in India and back once a year at one-third the normal fare. This is, of course, apart from the travel pass that was mentioned earlier.

Now, the unions are pressing for a few more privileges. The prime among them is free treatment for the porter and his family as inpatients in the railway hospitals. In 1995, the unions had already managed to get the outpatients department's free treatment facilities extended to the porter's family. Prior to that year, only the porter was entitled to those facilities.

But are even those privileges worth such a hefty amount? Yes, if you couple it with the earning potential and the actual time required for the job. As most of the coolies I met during the course of this research pointed out, the coolie's job had better work hours while paying the same as his previous profession.

The coolie can choose his work hours - he can work two hours a day or 12. In both the Nizamuddin station and the New Delhi railway station, the average coolie manages to earn over Rs 6,500 a month. That translates to about Rs 79,000 a year. In essence, Rs 200,000 forked out for a licence is equal to two and half years of earnings potential. If the coolie is prepared to work harder and longer hours, he can recoup his investment more quickly. In the Old Delhi station, the average earnings of a coolie are much less - roughly around Rs 3,000 or so a month. That gets reflected in the licence premium as well - an Old Delhi porter's licence can be had for a little over Rs 1 lakh.

Of the stations in Delhi, Nizamuddin is the most lucrative, according to the general consensus, and that is why the Nizamuddin licence also sells for a higher price than that for the New Delhi station licence.

So why is Nizamuddin more lucrative? It is a simple question of trains to porters ratio. In Nizamuddin, 95 long distance trains stop and it has 281 licensed coolies to service them. Also, because the station is compact, the average distance the coolie needs to travel is quite less. While the New Delhi station sees more long distance trains - 170 - it also has far more licensed porters. Currently, there are 1,453 porters working in the New Delhi station. Old Delhi station is the worst off with 1,001 licensed porters servicing just 100 long distance trains.

The working hours, the earnings potential and the privileges make the coolie's job attractive to at least some segments of the working population. Most of the people who try to become coolies are farmers with marginal holdings. They sell off their land to pay the premium because they consider it better value for money. But poor farmers and farm labourers aren't the only ones who become coolies.

Consider Om Prakash Gautam, badge number 194, a resident of Seelampur who is working as a coolie in Nizamuddin station. Om Prakash's father was a coolie but Om Prakash had set up a small plastic moulding business. However, he says, in good times, he used to earn Rs 5,000 a month from his business and in bad times, he ran up losses. When his father was disabled due to an electric shock in 2000, he thought of becoming a porter - after all, he was entitled to get the licence transferred to his name. He took the plunge finally when the Delhi government sent a notice to shut down his unit because it was flouting pollution norms. Om Prakash earns as much as a coolie now as he used to from his plastic moulding business. The only negative in his new job, he feels, is that coolies don't get any respect. At some point, he will move back to his business - but he will then pass on the licence to his brother. It is a precious licence simply because it provides a sort of a safety net, he says.

A coolie's earning potential is largely protected because the supply is limited even though demand - that is, the number of passengers and trains requiring their services - is going up rapidly. The Indian Railways bureaucracy has managed to do this because of its sheer inefficiency. There are no proper measures to figure out how many coolies should be licensed given the passenger traffic in a station. The demand for porters is estimated in a fairly ad hoc manner. This ensures that a few, new licences are issued only once every three or four years in the Delhi division. And given the time taken to vet applicants even for these new licences, there is always a demand-supply mismatch.

And that is why, though the official rates for carrying loads - Rs 9 for up to 40 kg luggage - are so low, the Railway officers readily acknowledge that the Rs 30-35 that the coolie actually charges passengers for that weight is fair. So why the artificially low rates? The answer is typical: "It is because the official rates are so low that the porter charges Rs 30-35. If we fixed the rate at Rs 30, they would charge Rs 100," one official told me. The fact that the Rs 30-35 that porters charge today are probably rates determined by the market - that is, few passengers would be willing to pay more - seemed to escape him completely.

How to transfer a licence

If you are lucky enough to get selected during the time that the Indian Railways is actually recruiting, you can get your porter's licence for a mere Rs 10. But, on the other hand, if you have to actually 'buy' a licence, how do you go about it? The Railways specifies some fairly stringent norms before a licence can be transferred.

According to the Railway board policy, a licensed porter's badge may be transferred to his son, or, if he has no son, to his near relatives in the event of his death or when he becomes too old or infirm to carry on with his duties properly. The list of near relatives specified includes the porter's brother, his brother's son, and even his brother-in-law. It is the last one which is the most interesting because it provides just the loophole needed for the transfer trade to flourish.

The transfer of badges requires a railway doctor to certify that the retiring porter is medically unfit for work. The person whom the badge is being transferred to also requires a fitness certificate from the railway doctor. Apart from that, the other conditions include:

  • Providing an affidavit indicating that the applicant is the sole earning member of his family, thus proving its dependence on him; and that the transferee is his nearest relative.
  • Another affidavit indicating that the transferee will bear the expenses of the applicant post-retirement, or of his widow in case the licence belongs to a dead porter.
  • A no objection certificate for the transfer of the badge from both the transferee and transferor (or his widow, in case of death)
  • Police verification report of the transferee.
  • Proof of residential address from the sarpanch.

The transferee should not have worked as a licensed porter with the Indian Railways in the past. Moreover, he has to show that he has no other source of income and, therefore, is in dire need of work. A competent authority, usually the commercial department, is supposed to scrutinise all the cases, and verify the doubtful cases. In the case of a bogus affidavit, the badge is required to be cancelled.

The 'hadh' system

Porters follow a fairly systematic procedure while offering their services. For departing passengers, licensed porters use the queue system and get to the passengers in turn. 
The case of serving passengers arriving from other stations is slightly more peculiar. Whenever an outstation train is about to arrive at a particular platform, porters start to assemble there some minutes before its arrival. Along the platform there are demarcations that divide the platform length into a number of parts, called hadh, each extending to about 50 metres, or equal to the length of a train compartment. In each hadh, only about four or five porters assemble initially. There is tacit understanding that they approach the passengers and get customers according to the same order in which they appeared in the hadh. They do not try to undercut each other, at least in the beginning.

In practice, the whole business of transferring licences has given rise to a thriving ecosystem. Touts who promise to do everything - from getting the medical certificate, to preparing the affidavits, and to making sure that the whole process is completed quickly - flourish in the shadows. Even legal heirs of the licences sometimes take recourse to touts simply to get the transfer done easily. Take Jeet Singh of Nizamuddin. When his father expired in 1998, he found it impossible to get the licence transferred the first time he applied for it. Finally, he paid Rs 20,000 to get it transferred in 2000.

On an average, 25-30 licences change hands every year. In over 70% of the cases, the transferee is shown to be the brother-in-law (saala of the porter). In two recent cases (badge number 1028 and 1317) at the New Delhi railway station, the original licensees who were bachelors showed that they were transferring the licenses to their saalas!

It isn't as if the Railway authorities are unaware of the racket. In the early 1980s, the transferring of licences was even banned. But in 1988, Rajiv Gandhi ordered its restoration. Since then, everyone agrees that at least half the transfers taking place do so for pure monetary considerations even though a random check of three licences carried out by the Indian Railways failed to detect any irregularities. As most of the illegal transfers happen through the brother-in-law channel, Ravi Prakash Varma, a member of Parliament, had even written to the Northern Railway officials in 2001, demanding the exclusion of transfers to saalas.

As long as the inefficiencies of the Licence Raj continue, most Railway officers agree, the practice will remain. It will be business as usual in the Indian railway station.

This article is based on a research project on the porter economy for the Centre for Civil Society, a New Delhi-based libertarian economic think tank. The author can be contacted at cinghal@yahoo.com..

Related reading: Coolies' badges fetch a fortune, Sourav Mukherjee, Times of India, May 31, 2004