A lot on the plate, now time for execution

Indian Railways has several projects either in the pipeline or in various stages of finalisation

The story of the Indian Railways under the Narendra Modi government is not what it achieved in its first three years, but what it might achieve in the next two. This is a reflection of not just the huge challenges the Indian Railways’ current infrastructure poses to anyone who wants to provide better transportation services for the nation, but also a reminder that no quick fixes can sustainably improve its performance. New projects, more investments and organisational revamp are steps that yield results only over a longer span of time.

Thus, the two dedicated freight corridor projects, whose execution on both the eastern and western routes gained speed in the last couple of years, are scheduled to be completed by 2019. There is still speculation that their completion may be delayed, but some key sections of these two busy sectors would certainly become operational before the next general elections. The promise of raising the freight train speed from the current level of about 24 kilometres an hour to 50 kilometres an hour could thus become a realisable target.

Similarly, work on the construction of two locomotive factories by GE and Alstom has begun and the Indian Railways could start getting deliveries of these modern locomotives, run on both diesel and electricity, from 2018. And then there is the much talked about railway station modernisation project. It is an ambitious scheme entailing an investment of over Rs 1 lakh crore. Contracts have been awarded for modernising two stations — one at Habibganj and the other at Gandhinagar, and construction has also commenced. Twenty-five more such stations are in various stages of bidding. 

To expedite these and many other projects including electrification and doubling of tracks, network expansion and track renewals for safety, a medium-term blueprint for investments has been finalised by the Indian Railways. An estimated Rs 8.5 lakh crore is to be spent in the next five years. On average, this is an annual investment of Rs 1.7 lakh crore for a five-year period, doubling the average annual investment by the Railways in the last three years.

A significant feature of this doubling of annual investment plan is that less than a third of the required resources would come from the exchequer by way of gross budgetary support. About 14 per cent of the resources would be mobilised through joint ventures with state governments, a move that would also help ensure greater participation of states in building railway projects in line with the government’s stated commitment to cooperative federalism. As many as 10 joint-venture projects have been planned involving different states. The private sector, too, has been roped in to provide about 13 per cent of these resources, while 15 per cent would come from the Indian Railways’ internal generation and the remaining 28 per cent would come as loans.

The Indian Railways medium-term plan has two more interesting components. It has planned to increase the share of non-fare revenues in its total turnover to 20 per cent. Last year, it realised about Rs 10,100 crore of non-fare revenue, representing an 80 per cent increase over the previous year. Yet, its share in total revenues was just about five per cent. The task would be tough, but it has the potential to diversify its revenue source, which would be a significant gain.

A more difficult task would be to reorganise the Indian Railways — an idea to which Railway Minister Suresh Prabhu is fully committed. The Indian Railways has seen mushrooming growth of a plethora of services, estimated to be well over half a dozen at present. Often, this results in lack of coordination among different services and an integrated approach to solving an issue or implementing a project becomes a casualty.

A few services have already been merged with each other. An action plan is being prepared to unify the cadres so that they could work towards a unified vision and the multiplicity of services does not impair the Indian Railways’ functioning. More reforms are on the agenda. Already, the Railway Budget exercise has been shorn of its annual ritual of the railway minister delivering a speech in Parliament and a new authority has been created to recommend fares and freight rates for the Railways. Now, accounting reforms have also been planned to establish a correlation between inputs and outcomes.

However, the larger message from the Indian Railways today is that it has taken several long-term initiatives to make a big difference to the functioning of India’s largest transporter of goods and passengers. But whether outcomes will eventually match inputs is something on which the jury will be out at least till 2019.