Despite higher Plan outlay, asset creation by Railways at slow pace

Instead of thinly spreading the resources, the Railways is now focusing on a few projects

Despite a 10 per cent increase in the total plan outlay of Indian Railways for 2014-15 and a sharp spike in investment on new lines, doubling and gauge conversion, the route-km to be added is down by a third.

Indian Railways added 450 km of new lines in 2013-14; the target is 300 km for FY15. Experts said the dip, despite more allocation, is because of two reasons. "Indian Railways has started prioritising the projects. Instead of thinly spreading the resources, these are now focused on a few projects, so that they can be completed and further cost escalation is avoided. The second reason is because of increasing allocations to projects in the northeast, where per-km cost is much higher," said Vishwas Udgirkar, senior director, Deloitte India.

For this financial year, the allocation to northeast projects has increased by 142 per cent. The average cost per km of construction is about Rs 10 crore, which can shoot up to Rs 100 crore for northeast projects, due to the terrain.

In the past two years, Indian Railways has been giving more emphasis to doubling, gauge conversion and track renewals over new lines. Experts say these areas are strategically more important than construction of new lines which might be commercially unviable or politically motivated.

The target for doubling has been kept at 2,100 km this financial year. Similar targets were kept for FY14, though these are much lower than in the first year of the 12th five-year Plan (2012-13), when Indian Railways added a little over 500 km of new lines and 3,296 km were undertaken for doubling.

In the first two years of the Plan, the railways added only 950 km of lines to its network. However, the Plan requires an addition of 800 km each year. In the last two years of the 11th Plan, they'd added 1,436 km.

The investment in procurement of rolling stock reached its peak in 2012-13, when Indian Railways invested Rs 18,365 crore. Market borrowings have been lowered for this financial year to Rs 11,790 crore, compared to 15,103 crore for the last year. "If we continue to borrow at this rate, we will soon enter into a debt trap," the Railway Board chairman had said at a recent interaction.

Indian Railways has a total route length of 64,460 km, of which 11,864 km have been added since 1947.