It is often pointed out that every rupee invested in ramping up railway infrastructure benefits the economy six times over. Therefore, after languishing for nearly 70 years, modernisation of the sector has been put on the fast track.
Generations of young Indian students have been learning from their primary school textbooks that in 1853, the first passenger railway line in India was inaugurated between Mumbai and Thane, a distance of 34 km. The event made the country one of the first in Asia to kick-start the development of its own railroad network.
At the time of independence from the British Raj, India had 53,596 route kilometre of rail track. In comparison, in neighbouring China, the first railway line was opened in 1876 between Shanghai and Woosung, a distance of nearly 25 km. In 1950, when the Chinese civil war ended with the victory of the Chinese Communist Party, our eastern neighbour only had 27,000 km of rail track, though it possessed a larger land area.
Now fast forward to the present. In the mid-1990s, China overtook India with a longer track and in 2015, it had 121,000 route kilometres of railway track. Today, it also has 19,000 km of high speed track, which is the longest in the world. In 2014, the railways in China carried 2.357 billion passengers and 3.813 billion tonnes of freight. In contrast, Indian Railways (IR) today stands at 92,81 route kilometres of running track. In 2015û16, it carried 8.107 billion passengers annually or over 22 million passengers a day, which continues to be the largest in the world and 1.101 billion tonnes of freight annually.
In nearly seven decades since independence, any serious attempt at expanding the IR network was plagued by the same lackadaisical attitude that other modes of transport were mired in.
Rebooting the railways
It is often pointed out that every rupee invested in ramping up the railways infrastructure benefits the economy six times over. Soon after the National Democratic Alliance (NDA) government came to power in May 2014, a committee was formed under Professor Bibek Debroy to restructure the Railway Board. A majority of recommendations made by the senior economist at the New Delhi-based Centre of Policy Research have already been implemented. Two cross-functional directorates for non-tariff revenue and mobility, reporting directly to the Chairman of the Railway Board, were constituted. Powers were also delegated to general managers and divisional railway managers to expedite decision-making.
As part of the 2016 Union Budget, the IR had proposed listing of three PSUs: Indian Railway Construction Company (IRCON), Indian Railway Catering and Tourism Corporation (IRCTC) and Indian Railway Finance Corporation (IRFC). This was reiterated by Prime Minister Narendra Modi in his budget speech this year. The PSUs are currently being evaluated with a corporate plan in advanced stages of preparation. The decision on the quantum of money to be raised will be determined after taking into account the prevailing market conditions at the time of issuance. But it is not going to be easy as some railway unions are reportedly unhappy with the proposal. The Union Railway Minister Suresh Prabhakar Prabhu has ruled out that there can be any move towards privatisation owing to the 'public service obligation' of the railways.
In 2015, a sum of Rs 1,000 billion was allocated to the Railways under the gross budgetary support (GBS). The following year, it was increased to Rs 1,100 billion. In 2017, the amount was further increased to Rs 1,300 billion. Out of this, only Rs 550 billion is contributed by GBS and the Railways raises the balance on its own. This is in addition to the Rs 4,000 billion capital expenditure (capex) that the Railways incurs on contracts awarded to GE and Alstom. It has also undertaken other major projects such as station development programme, Rs 8,500 billion dedicated freight corridor and port connectivity projects. The Railways is meeting its capex requirements through a combination of GBS, extra budgetary support and public-private partnerships (PPPs). It is also keenly examining other methods of raising capital. For instance, it has got several states to sign joint venture agreements to ramp up railway infrastructure. With focus on spending more on ramping up its infrastructure, the Railways has proposed Rs 850 billion towards modernisation. Of this, Rs 131 billion is budgeted for capex and development in 2017-18. According to industry insiders, focus on improving the throughput by further 10 per cent through various infrastructural developments will help railways in the long term.
The budget also has provisions for safety, infrastructure development and energy efficiency. A separate Rail Sanraksha Kosh or railway safety fund of Rs 100 billion over the next five years would see the Railways investing in enhancing passenger safety by implementation of train protection warning system, train collision avoidance system and automated signalling and safety systems. Expeditious rollout of these technologies would help eliminate over 6,000 unmanned level crossings by 2020. The Railways has also proposed having 7,000 solar-powered railway stations in the medium-term and converting degradable waste to energy for improving energy efficiency, apart from increasing the speed of electrification.
Adds Tilak Raj Seth, Executive Vice President, Mobility, Siemens, 'The Ministry of Railways is doing well to sound financial institutions like the Life Insurance Corporation (LIC) etc., to aid in the rail safety efforts as it is a long-term investment'.
In July 2016, the Indian Railways Station Redevelopment Corporation inked an agreement with a consortium of Bansal Construction Works and Prakash Asphalting & Toll Highways for modernisation of the Habibganj railway station in the central Indian state of Madhya Pradesh. The cost of redeveloping the station is Rs 1 billion, with the estimated cost of commercial developments at Rs 3.5 billion. Habibganj is one of the eight stations identified by the Ministry of Railways for redevelopment and modernisation through PPP. The others are Chandigarh, Pune, Mohali and two stations each in Delhi and Gujarat.
Several countries too have evinced interest in participating in railway station modernisation.
A proposal worth Rs 80 billion from South Korea is pending with the Railways for the redevelopment of New Delhi railway station. Similarly, France is keen to redevelop the Chhatrapati Shivaji Terminus in Mumbai and Ludhiana Junction in Punjab.
Proposed G2G agreements and railway regulator
Ministry sources have also indicated to INFRASTRUCTURE TODAY that similar to the Defence sector, government-to-government (G2G) investment agreements were also likely in the Railways. As many as 14 countries, including Japan, China, Germany, Czechoslovakia, Italy, South Korea and France, have been approached for technology partnerships. The ministry is favourably disposed towards G2G as it frees them of the worry of involving private players, since the money would be allocated by the government of the partner country. Japan alone is reportedly going to invest in the range of $25 billion in modernisation of the Indian railway network. Besides, G2G will also enable adaptation of the best of global technologies on the Indian railway network.
In another landmark development, in April, the Union Cabinet approved the setting up of an independent regulatory agency to be called Railway Development Authority (RDA). This would help in bringing in transparency in the process of revising passenger and freight tariffs. Although the RDA will only have recommendatory powers, its formation is expected to facilitate in the upward revision of passenger fares. This will help in rationalising freight rates, which are often considered to be unusually high for a rail-based transport system. From 2004 to 2014, the federal government had avoided touching the already highly-subsidised passenger fares for the fear of angering voters. Consequently, the Railways was forced to absorb a loss of about Rs 360 billion yearly. RDA will also work towards creating a level playing field for stakeholder investment in the railways, propose amendments and make suggestions on references made by the ministry regarding policies for private investment. Notably, it will ensure reasonable safeguards to PPP investors and resolve disputes regarding future concession agreements.
For a long time, the Indian Railways suffered from the problem of underinvestment. Over the years, the operational ability, efficiency and safety of the Indian Railway network has been severely compromised. The present dispensation therefore, is trying to reverse this trend over a five-year period. For instance, in the fiscal year 2017û18, the Indian Railways is targeting at laying 19 km of new rail track daily or 2,800 km for the entire year.
Mangal Dev, Head, Hitachi Rail Systems Co. India & South Asia Region, opines, 'The Railways is taking a lot of action in the right direction. It is now using the right technologies and has also made changes to its project implementation strategy. It wants to track all the ongoing projects and complete them expeditiously before starting on something new. This is very important as it means that resources will get freed up faster for other projects'.
Other than ramping up physical infrastructure, the Railways has also tried to make its processes more transparent. E-tendering is one such step in this direction. All decisions pertaining to contracts are now being taken at the general manager level.
Multiplier benefits of railway modernisation
The complete overhaul of the Railways has been necessitated by two factors: first, it's loss to road transport and second, it's loss to airlines since the turn of the millennium. The fact that in both road transport and aviation, a fairly large part of the business is privately-owned has worked to the advantage of the firms engaged in these sectors. Conversely, as a government-owned entity, the Railways is constrained by its obligations. And therein lies a huge challenge: how to bring the public-sector behemoth up-to-date to make it competitive all over again.
With the railway sector picking up traction, some of the participants are already quite gung-ho about the growth prospects. 'We have been an integral part of the IR ecosystem for several years now and have made significant contribution to various projects across the country. Our contribution to this ecosystem has doubled in the last two years,' informs Prabhakar Atla, Senior Vice President, Rail Transportation Business Unit, Cyient, a software-enabled, engineering and geographic information system (GIS) services firm.
CMI Ltd, which is among the leading suppliers of specialised wires and cables to the Indian Railways and its subsidiaries, is looking at further expanding its portfolio. Says, Managing Director Amit Jain, 'We have always been in the forefront of adopting globally-tested technologies to leverage them with our international railway and metro clients.
We shall be launching various other special purpose cables used in the wiring of coaches. We are also at the design board stage for special cables for high-speed trains.
According to Simarpreet Singh, Head Strategy, Hartek Group, 'There is a huge potential in electrification and renewable energy. Since plenty of opportunities are there in these two segments, we want to build a good market share there.' However, experts are also warning that the imminent boom in the sector could also create a shortage of skilled manpower. 'By the way, we are the only country with such a large rail network that does not have a railway university,' Tilak Raj Seth, Executive Vice President, Mobility, Siemens, observes without mincing any words. Engineering disciplines for the sector are being introduced at the university level. 'But efforts need to be scaled up so that the Indian Railways, industry and metro authorities collaborate on PPPs to create a common pool of railway resources for the long haul,' emphasises Mangal Dev, Head of Hitachi Rail Systems Co., India & South Asia Region.
A multimodal and integrated transport system has a bearing on a nation's economic growth, prosperity and environment. Therefore, considerable capacity addition is essential. Railways can look forward to regaining lost ground by integrating end-to-end transport solutions through partnership with logistics providers for front-end and back-end solutions for select commodities and enhancing private participation through logistics parks and warehousing for last mile connectivity. Similarly, the New Metro Policy is likely to help in job creation with its innovative implementation and financing options and standardised implementation processes.
Industry has rated various initiatives taken by the Indian Railways as pragmatic and progressive and feels that they would collectively result in the transformation of the nation's lifeline. However, it is also much desired that this approach to India's most iconic mode of transport is sustained in the decades to come.
Kochi gets a metro with many 'firsts'
The Phase I of Kochi Metro was inaugurated by PM Modi on June 17. It is India's first metro system to have communication-based train control (CBTC) signalling system to minimise human interference in operations. Kochi Metro Rail Ltd (KMRL) is also the first in India to generate 25 per cent of its power through solar panels. The 4 MW solar plant is a Renewable Energy Service Company (RESCO) model, where Hero Future Energies will be billing KMRL for energy consumed in all their earmarked stations. Not only that, about 99 per cent of braking energy of each train will be used by the subsequent train. Kochi Metro is also the longest first phase to be commissioned in the shortest possible time. It is also the first metro to have a waterway component. The innovative 'Kochi One' multi-purpose smart card that is introduced can be used on other modes of public transport in the city as well as for any other transactions across India. A substantial number of the thousand-odd metro pillars will host vertical gardens and will use recycled municipal waste as manure. This is also the first metro project to get 'Make in India' coaches fabricated by Alstom Sri City, Andhra Pradesh.
Phase I of Bengaluru's Namma Metro
The final 12 km Sampige Road to Yelachenahalli section of Bengaluru's 24.20 km Green Line was flagged off on the same day as the Kochi Metro. The sixth and final section of the 42.30 km stretch of Phase I will add immense value to the network. According to sources, since its inauguration, ridership has crossed 300,000 passengers daily. Work on Phase 1 had commenced in April 2007. Its completion makes Namma Metro India's second longest operational metro system after Delhi. The Bangalore Metro Rail Corporation Ltd (BMRCL) fleet presently consists of 50 three-coach trains, of which 27 operate on the 24.20 km Green Line and the remainder 23 on the 18.10 km Purple Line. The coaches were fabricated at the city-based rail coach manufacturer, BEML Ltd. Completion of the final section of Phase I has resulted in the addition of 10 new stations to Namma Metro.
- Manish Pant