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Railway Expansion:GET PRIVATE SECTOR ON TRACK, by Dhurjati Mukherjee, 30 October 2009 Print E-mail

Open Forum

New Delhi, 30 October 2009

Railway Expansion


By Dhurjati Mukherjee

Railways are now in the news not just because of the special trains that have started operations in the country but also because of the varied diversification plans that were announced in the budget. Moreover, an expert committee has been formed to develop Vision 2020, which includes business models for the Delhi-Mumbai industrial corridor, use of railway land bank along the eastern dedicated freight corridor, exploring public-private partnership in setting up a coach factory and starting freight terminals and multi-modal logistics parks, etc.  

This apart, the Prime Minister is interested in preparing a road map to reform the Indian Railways. Comparisons are being made with China, which has added 1000 km of tracks every year since 1992, whereas we are way behind with just 100 km. Manmohan Singh has thus expressed interest to emulate the Chinese model to stimulate economic growth. It is understood that the ambitious Rs 28,000-freight corridor project has been proceeding at a snail’s pace and needs to be expedited. Moreover, there are unfinished projects worth Rs 65,000 crores thanks to paucity of resources. Clearly, private resources are needed and such an investment is estimated at around Rs 20,000 crores.

A White Paper is under preparation and is expected to be presented to the ensuing Parliament winter session. The Railways, it is understood has a land bank of 300,000 acres, which is its biggest asset. Enough land is available for further development of freight corridors, including east-west, south and south central and it can best be made use of by Public-Private Partnership.          

This has been by Manmohan Singh as well as Railway Minister Mamata Banerjee, who has already initiated modernization of stations into 50 world-class stations and 375 model stations. But the induction of faster trains and expansion of the Railway network obviously calls for track renewal and track expansion which needs lot more expenditure.

Though Banerjee has ruled out corporatizing the railways, one is reminded of the Rakesh Mohan committee which in 2001 outlined specific steps for modernization. Its recommendations included decentralization of power, encouragement to private participation and eventual corporatization of the railways. All these are in the process of steady implementation. Initially, the report was not quite favoured because the prevailing political and business environment was not conducive to such a reform-oriented measure. Fortunately, over the years a lot of development has taken place, necessitating a revamp of the Railways.         

The important challenges before the Railways therefore are: reorganization of the core transportation network into key components – freight, passenger, suburban, fixed and shared infrastructure; track renewal and modernization so as to ensure faster movement of trains; expansion of the railway network to all parts of the country; ensuring proper safety standards to reduce accidents; improving flexibility and cost competitiveness; meeting the challenge from private airlines, which have drastically reduced fares (almost like AC-II tier rates).

To cope up with all these developments funds and other efforts are imperative and corporatisation may be one solution. The Rakesh Mohan committee had predicted that the Railways would not be able to generate the kind of resources needed to give a market rate of return on additional debt and fresh preference capital. Accordingly, the low-growth business would drive the railways to “a fatal bankruptcy”. In 16 years, the Government will be saddled with “an additional financial liability of over Rs 61,000 crores”, the report predicted.

While the new committee is expected to come out with some innovative suggestions, boosting up finances needs to be kept in mind. So far, the surplus funds available stood at Rs 8361 crores after paying the Pay Commission’s burden and dividend to the Finance Ministry as against the previous Minister’s claim of Rs 90,000 crores. 

At this point, it is estimated that an investment of over Rs 300,000 crores would be needed by the year 2015 for a host of activities such as gauge conversion, freight corridor along with upgradation of feeder routes, asset renewal and augmentation of high density routes and increasing the manufacture of rolling stock. 

Sadly, the efficiency of the railways as also the service it provides to the passengers has a poor rating, but efforts are afoot to improve the functioning. The Railway Safety Review Committee headed by Justice Khanna had observed: “A single flaw in the 62,495 route km of track that crisscrosses the country, a defect in the 7,500 locomotives, 40,000 coaches and 2.5 lakh wagons that haul over 11 million passengers and over 1.2 million freight every day, an indication on one of the thousands of signals, a mistake or an act of negligence by one of its 600,000 frontline staff directly associated with train running, even a rash act by one of the million road users who daily negotiate about 40,000-odd level crossings spread across the system, an irresponsible act of carrying inflammable goods – any one of these possibilities has the potential to cause a major tragedy”.

Insofar as mishaps are concerned, the railways are a highly labour-intensive system and it is thus no surprise that two-thirds of the accidents are on account of human failure. The issue has been taken up appropriately. Since the start of the millennium, a technology upgradation programme has been taken up in order to reduce dependence on the human element, as is done in most countries. This is, however, a costly process. The pace, stage and level of technology depends on the extent of investment, size of operations, increasing demand of traffic and assimilation of technology. But it has to be done.   

Fortunately, a railway safety fund has already been created to clear the backlog of arrears of track renewal, rehabilitation of distressed bridges and overhead signaling gears, coaches and wagons. It has a corpus of around Rs 20,000 crores out of which about 70 per cent is expected to be provided by the Centre and the remaining by the Railways through a safety surcharge which has been in place since October 2001.

Undoubtedly, there are no two opinions that there is need to revamp the whole railway system so as to improve its viability as also in its quality of services. All-round safety standards too need to be ensured. Moreover, its expansion cannot be ignored. All this is definitely an enormous challenge that, experts feel, can only become realistic through proper planning and phased privatization. Parochial interests of politicians should not come in the way of implementing a viable action-plan for the coming 10 years of the priorities and challenges before the Railways.

Indeed, the Indian Railways must take up the challenge of being one of the best in the world and should encourage the private sector to participate in its non-core activities. Hopefully, the recent-most expert committee should lay the ground work for the Railways to chug along ahead and that its recommendations get the green signal.  --INFA

 (Copyright, India News and Feature Alliance)’

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