STRENGTHENING INDIAN RAILWAY’S
CONTRIBUTION TO THE ECONOMY
and Achievements of Indian Railways (IR)
1. Indian Railways be complimented for National Railway Plan (2030) which addresses Network congestion by rapid capacity augmentation of 5,571 Km of very high density network. Prioritization has been done by classifying criticality of projects with a total outlay of Rs 7.5 lakh Cr.
2. Vision 2024 focuses on Port connectivity, coal evacuation, J&K projects and North East connectivity for completion by 2024.
3. Delhi- Mumbai and Ludhiana– Delhi– Sonnagar Dedicated Freight Corridor (DFC) projects (Total 2800 km), to run long haul goods trains at a speed of 100 kmph potential which is planned for completion by 2023. Construction activities in the high speed Mumbai-Ahmadabad project, held up earlier by land acquisition problems have gathered momentum.
4. Achievement of IR has been on safety with no serious passenger Train Accidents during period 2019-20 - 2020-21 by expediting replacement of over aged assets / track renewals, elimination of unmanned level crossings and replacement of old coaches by new safer Linke Hofmann Busch (LHB) coaches.
CONCERNS AND RECOMMENDATIONS
5. These include recent trends of high operating ratios, low generation of internal net surplus revenues leading to low funding for safety, capital and rehabilitation works. The Parliamentary Standing Committee (2019-20) on Railways also made observations on above concerns.
6. Losses in Passenger Operations. These have mounted to over Rs 50,000 Crs annually. IR needs to address this issue urgently by a progressive increase in fares and seek State & Central Govt support for taking over suburban losses. High Staff costs (60% of working expenses) will need to be reduced by freezing some percentage of vacant posts, progressively.
7. Uncertainties in Future Coal Freight Earnings. Presently these contribute to around 48% of total freight earnings. Demand will come down in future because of carbon emission/climate change issues. Economic Survey (2019-20) has stressed need for IR increasing its share of freight traffic from around 27% to 45% by 2030 in rail/road freight mix from energy conservation/ carbon emission angle. This will be challenging.
8. Financial Performance. 2019-20 ended with Gross Traffic Receipts Rs.1,89,906.58 Cr and Total Working Expenses Rs 1,84,780.30 Cr. The Net Revenue Receipt was only Rs 3,773.86. The Average rate paise/passenger Km was 20.7 in Suburban & 52.4 in Non Suburban.
9. Standing Committee on Railways has revealed a consistent fall in revenues, rising expenditure coupled with erosion of customer base in freight and passenger traffic. There has been increasing dependency on Extra Budgetary Support. Prudence demands of not over reliance on market borrowings. Committee suggested that a part of pensionary payments burden be taken over by Ministry of Finance.
Passenger and Suburban Losses
10. IR is incurring losses over Rs 50,000 Crs annually on passenger/ suburban operations. Survey shows that economic categories can absorb price rises.
11. Suburban Segment. Mumbai Rail Vikas Corporation (MRVC) report states that Mumbai locals have cheapest public transport at 50 paise per km vis Metro at Rs 5 for a km, and BEST at Rs 4/km. There is Considerable scope to increase Suburban fare.\
12. Long Distance Passenger Segment. Buses are popular for distances around 250 kms. However, Rail scores over with sleeper facilities and need to adopt dynamic pricing for reserved accommodation for trains like Rajdhani– Delhi- Mumbai. Other Rajdhani’s and new fast trains, semi high speed Vande Bharat and special trains run more than 30 per day. There is a need for running some trains with chair cars, especially with upgradation of trunk routes up to 160 kmph. Coaches be fitted with seats with airline type ambience, better designed toilets and heating ovens for food. Platform & travel tickets should include insurance for accidental injuries and ticketless drives must be intensified.
13. Dedicated Freight Corridors. With diversion of Goods trains to DFC from trunk routes, released capacity should be judiciously utilized for new high revenue segments e.g. running of high speed, time tabled, high value parcel trains. To enable pickup and delivery to doorstep, IR should collaborate with cargo couriers/ operators to help in last mile delivery.
14. Special Measures to attract additional Freight to enable IR to reach a share of 45% in Rail / Road Freight Mix. Railways involved in movement of raw materials for steel and large cement plants must focus on greater share of finished steel products and cement and deliver them to specified stockyards or cluster of their warehouses in the region by cooperation with Road Operators. Road transport scores over IR in delivery time. Therefore IR should cut terminal delays and enroute detentions. While Kisan specials have been planned, Milk traffic needs focus with development of refrigerated wagons. IR must effectively integrate into PM Gati Shakti program.
15. Terminal Development. Focus on terminal development especially on PPP mode can help improve efficiency, reduce terminal detention with mechanised handling, providing good road access and locating warehouses near loading points. Railways will have to ensure timely delivery of wagons and withdrawing after loading.
16. Need for Compulsory Shift of Medium Distance Heavy Road Freight Traffic to Railways through Policy Initiatives to progress PM’s commitment of Zero Emission India by 2070. Railways consume only 1/6th energy required by road transport. With 100% electrification of IR and progressive increase of Renewable Energy in the National Grid reaching 50% of total mix by 2030, there will be further reduction in carbon emission if freight traffic from road is shifted to Railways. Govt. will have to hasten the issue of shifting of heavy Road freight to Rail as this cannot be left to market forces. While electric mobility is being encouraged with incentives, bulk of the movement on Highways will still be on fossil fuels for a long time.
18. Planning future Dedicated Freight Corridors Alignment Based on Energy Saving Criteria. In case of Delhi–Howrah, Delhi–Mumbai DFCs, where alignment has been planned adjacent to existing trunk routes, planning for future DFCs be attempted on shortest feasible alignment. NHAI has shortened its Mumbai-Delhi route alignment on this pattern to ensure considerable energy saving. Future DFCs should be planned for 32.5 ton axle load wagon running. New DFC alignment should be connected whenever interchange is required to PM Gati Shakti intermodal points. DFC may also provide adequate land in the central verge to plan rapid transit rail systems to cater for Metropolitan/Tier1 cities to reduce overall land costs.
19. Monetization of Assets. There is huge potential of monetizing land at Stations and Railway Colonies in metropolitan cities. Due to complexities involved, there is hardly any visible outcome in policies.
20. Corporatization of Railway Production units – Privatization of Railway PSU’s – Retention of Majority Control in RailTel. Govt needs to hasten Corporatization of Railway Production units to enable them to reach their full potential to serve the needs of economy beyond Railways e.g. Defence sector.
21. RailTel PSU. With monopoly in Optic Fibre Cable laying (OFC) IR has completed over 60,000Kms which is nearly entire IR system. It is also providing support to Railways (24X7) in traffic operational systems including signaling safety between stations, Anti train collision protection systems (Kavach), traffic control management, radio communication to stations besides add on services. Rail Tel is also involved in providing communication support to many Govt/ PSU units, and organizations involved in National security. For Govt control, disinvestment of RailTel be restricted to 49%.
22. Austerity measures in Revenue Expenditure and Careful Project Selection/Reducing Project costs. Railways need to prune down Revenue expenditure and Project costs. It must explore low cost options like improved signaling by introduction of more Centralized Traffic Control (CTC), Automatic Block Signaling (ABS) prior to planning for additional routes involving land acquisition.
23. Financial Interventions for Consideration. When unremunerative projects are undertaken with External Benchmark Rate (EBR), prior approval of Ministry of Finanace (MoF) be taken. Market borrowing be restricted to 10% to 15% of capital outlay till internal revenue generation situation improves. A new model be instituted by MoF to demarcate commercial and social responsibilities of Railways and support funding by Ministry of Railways and Ministry of Finance.
24. Pricing. There is distorted pricing due to non-revision of fares for Passenger segment. Further, there is loss in suburban traffic with more projects in the pipeline. It is suggested that like the Highways, an act/ rule be contemplated with annual revision of fares linking these to indices like WPI etc. Taking a leaf from the ‘Bad Bank’ set up by the MoF for bad
debts suburban trains system be hived off into an independent entity from financial angle by creation of a special financial structure supported by contributions from Central, State Govts & IR to share losses. Operations to continue with IR.
25. Need For a Full Fledged Railway Regulator. Considering that the PPP model is increasing, there will be need for a full fledged Railway Regulatory mechanism to sort out issues between private operators and IR. With shift of Heavy Freight Road Traffic to Railways, it is desirable for one common regulator for the entire transport sector in future.
26. Building Human Capital in Railways. Keeping in view technological upgradations, it is important Railways pay adequate attention to quality of staff recruited at lower levels. Depending on the competence required, standards similar to Army Recruitment system be implemented. Railways bonus system be restructured for different categories of staff which will lead to overall higher productivity.
27. While restructuring the Railway Board on non departmental lines is welcome, ignoring needs of technical/ professional specialization at lower levels may affect professional performance of the organization. Technical departments be retained below the Apex level of the Railway Board. The Indian Railway Medical Service (IRMS) cadre can be created from Divisional Railway Manager (DRM) and above level consisting of all the general posts like AGM, SDGM/CVO, CPO, CPRO, GM etc.
Suggested Focus for IR for 2030
28. Indian Railways should strive to become low cost, efficient, safe, profitable and zero emission transporter of Passengers & Goods. By integration into PM Gati Shakti program, IR should become the backbone of National multimodal transport network.
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