Open Forum
New Delhi, 30 October 2009
Railway Expansion
GET PRIVATE SECTOR
ON TRACK
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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