Indian Railways: on a fast-track!
RAILWAYS & METRO RAIL

Indian Railways: on a fast-track!

The ambitious National Rail Plan and consistent step-up of finances for upgrade of tracks and signalling etc in the Indian Railways shows the direction the government wants. With the Eastern and Western Dedicated Freight Corridors nearing completion, capacities too will be enhanced. However, allowin...

The ambitious National Rail Plan and consistent step-up of finances for upgrade of tracks and signalling etc in the Indian Railways shows the direction the government wants. With the Eastern and Western Dedicated Freight Corridors nearing completion, capacities too will be enhanced. However, allowing the private sector a bigger role, treating them with less suspicion and understanding the ground realities of various cargo requirements is crucial in managing the success it has set out to achieve. Unless ground level issues of last and first mile connectivity at the ports are sorted urgently, it may be a case of, 'for want of a needle a battle was lost.' When the Union Budget 2023 declared a sanctioned layout of Rs.2.5 trillion for the Indian Railways (IR), it raised the hopes of industry, which has been looking for an upgrade in rail services. However, this budget was factoring in the ambitious National Rail Plan which was conceived in 2019 with 2030 and 2050 targets. The National Rail Plan (NRP), a long-term strategic plan for the growth of the rail sector by 2050, has translated into the goal - Mission 3000 Million Tonne. In 2022-23, the Indian Railways (IR) had loaded 1,400 million tonne of freight, which was about 27 per cent of the total freight transport in the country. In 2023-24 it was targeting 1,500 plus million tonne. Another 100 million tonne is to be added periodically, to reach 3,000 million tonne by 2030. Cargo moves on rail when it is faster and cheaper than road travel. Therefore, there were twin goals of upgradation and achieving the set targets of cargo capacities. At a seminar in New Delhi a few months ago, the then Railway board Chairman and CEO, not only spelled out the policy but also flagged the challenges with infrastructure capacity. While the highways received substantial funding and rapidly evolved, the investment in IR had not been commensurate with the growth of the economy. So now that funds have been sanctioned, will the IR be able to develop substantial terminal capacity, first and last mile connectivity for capturing the traffic, increase the rolling stock fleet to carry traffic and develop adequate maintenance facilities? He raised these as vital to reach the target of carrying 3,000 million tonne. Planned upgrades: The Railways has done its research. To carry 3,000 million tonnes, 1,200 works or projects have been identified, which were to be completed in five years from 2019. The projected cost of this capex was about Rs.8.5 trillion. That included about 9,000 plus km of new lines; doubling and multi-tracking to about 25,000 km and automatic signalling on over 10,000 km of track. Besides, it planned to upgrade the overhead equipment from 1x25 kv to 2x25 kv, which would enable it to carry higher freight volumes. IR also intended to add more than 1.5 lakh wagons to their fleet. The first part of the problem has been addressed. Planned outlays for the railways sector has been steadily rising. In 2022-23, the budgetary outlay for the railways was, at the project stage,  Rs.1.37 trillion. This was subsequently enhanced to  Rs.1.59 trillion. In 2023-24, it was increased to  Rs.2.5 trillion - an increase of more than 50 per cent. The Government support was evident. Integrated Planning: To bring different modes of transport together, the Department for Promotion of Industry and Internal Trade (DPIIT) and the Ministry of Commerce are now working on integrated planning of various modes of transport, to bridge the gap between them. Every single project now being taken up is evaluated by the network planning group, which holistically assesses roads, ports, and railways, to make a decision. In 2009-14, the speed of commissioning infrastructure was 4 km per day. It has now increased to 11 km per day and the plan is to further increase it to 16 km per day. The former chairman also spoke about the Gati Shakti cargo terminal policy which was launched in December 2021 for construction of cargo terminals on railway land. So far 36 Gati Shakti terminals have been commissioned and 96 more locations have been provisionally identified for development. In principle approval has also been given for 97 locations. All possible help would be given to Gati Shakti cargo terminals and the response has been good. To attract this investment from the private sector, many steps have been taken. The application process was substantially simplified with provisions for online applications and time-bound approvals; Standard layouts could be adopted and no departmental charges would be levied if it hadn’t been registered for development of Gati Shakti cargo terminals. No licence fee was levied on linear connectivity to the railway line. Common user traffic facilities would be developed without any great cost. Containerised cargo: In the containerised cargo business too some changes have taken place. The first step was to create a level playing field for the private freight train operators with the Container Corporation of India (Concor). To encourage private sector participation for development of terminal facilities, the land management policy has been substantially eased by IR. The right of way policy too has been simplified recently. Lease charges for the new cargo terminal will only be 1.5 per cent of the market value of the land per annum. Today the lease charges for the public sector Concor and private operators are the same. Shadow of the past: Mukul Saran Mathur, PED, Infrastructure, IR, pointed out a few issues that the railways would have to address before it could make investments that translate into larger cargo volumes. Today the total potential of the basket is 5,000 million tonnes, of which the Railways would move about 1,500 million tonnes in 2022-23 and 1,600 in 2023-24. While the overall size of the basket had grown 55 times since the 1950s, the IR's growth has been only 20 times. There was a challenge here. But there were a lot of opportunities too. Modernisation: With the enhanced capex allocation, as the second-largest network managed by a single entity worldwide, the IR has pursued a modernisation programme in recent years. Of the capex allocation of Rs.2.5 trillion, many projects are aimed at capacity augmentation and traffic decongestion. Part of the funds would be used for the ambitious plan to lay approximately 100,000 km of new track over the next 20-25 years. “In New Line (New Line/ Doubling/ Gauge Conversion) 5,243 km was achieved during 2022-23 as compared to 2,909 kms during 2021-22. Thus the average daily track laying stood at 14.4 kms per day. It is also the highest ever commissioned,” said the IR statement earlier this year highlighting its achievements in track laying and augmentation. Various other capacity enhancements too have taken place. In its Mission 100 per cent electrification, it aims to become the largest green railway network in the world. In 2022-23 alone 6,542 RKMs have been electrified, surpassing the previous highest electrification of 6,366 RKM during 2021-22, registering an increase of 2.76 per cent. This contributes to India’s ambitious green target taken globally. One of the big achievements for the IR is the successful transition to green energy. “By 2030, India will be a country whose railway network will run on net zero emissions”, the Prime Minister announced. Besides, to increase line capacity to run more trains on existing high density routes, the IR has upgraded 530 kms with automatic signalling in 2022-23 as compared to 218 kms during 2021-22, registering an increase of 143.12 per cent. It is also the best figures achieved in automatic signalling in the history of IR. Despite these, the cost of logistics in India is currently 14 per cent of GDP, significantly higher than global standards and there is an effort to reduce that to below 10 per cent. Besides, during 2022-23, for enhancing passenger and consumer convenience, 1,065 flyovers/underpasses were provided as compared to 994 during 2021-22 showing an increase of 7.14 per cent, 375 FOBs were constructed, 215 lifts and 184 escalators were provided at stations and 880 level crossing gates were eliminated. For enhanced safety, 538 digitally interlocked stations have been created from old lever frame to computer-based operating systems. Electronic Interlocking is being adopted on a large scale to derive benefits of digital technologies in train operation and to enhance safety. Consumer centricity: However, to achieve the target of goods movement, says Raghu Dayal, first CEO of Concor, would entail IR being customer centric. It would have to relearn and learn quite a lot from the industry. This included understanding the mix of cargo that should move along its tracks to reach the ambitious targets. What the IR was not able to target was the non-conventional goods. The non-conventional goods were about 2,000 million tonnes, constituting 43 per cent of the total basket. Out of this, the IR had a very miniscule share of about 6 per cent. Steel industry: The problem is that the industry is growing at a speed faster than the railways can match with its present infrastructure. All the projects that ran on delayed timelines in the past have now become critical. For instance, the steel sector has an ambitious plan of scaling up the railways’ share of its transportation. After all, this speed of change can only come if the organisation is agile and flexible to the changing needs of a rapidly growing economy. Private sector participation has proved the solution in airports, ports and roadways. The Public-Private-Participation mode brings in money from the private sector, with the public sector as the client. Long-term monetisation of assets gives the private sector operator a chance to recover the funds over a period of time. The IR is yet to adopt this model in many cases. Even railway station upgrades are mostly given on EPC contracts with all investments coming from the Railways itself. Animesh Gupta, President and Chief Logistics Officer Jindal Steel & Power, spoke of the ambition of the NRP, in which the share of freight had to go up from the current 27 per cent to 45 per cent. In 2021-2022, 18 million tonne were moved. Out of this 45 per cent was coal, 17 per cent iron ore and 38 per cent other commodities. Gupta wanted logistics to be redefined and enablers put in place to manage the ramp up ambitions by 2030. In Jindal Steel and Power, the 9.3 million metric tonnes produced currently was scheduled to be ramped up by 390 per cent by 2030 to 37.7 million metric tonnes. Correspondingly, the share of freight with Railways was to be stepped up from the current 65 to 90 per cent. The steel industry faced several challenges in movement of finished goods. The average current speed of freight trains was just about 15-16 km per hour which was to be enhanced by 2030 to 50 km per hour. This over three-fold growth plan hit the challenge of infrastructure. For instance, in the railway project Angul-Sukhinda rail line, there was a delay of 7.4 years. It was supposed to be completed in February 2015, but was completed only in July 2022. The Vaswani-Jagpura doubling line was to be completed in March 2019, but was now expected to be completed in December 2023, a delay of about 4.8 years. Without addressing these issues of delays, the 2030 vision could not be accomplished, Gupta stressed. “You must measure every day, every month, what is happening.” Another problem flagged by the steel industry was the fact that boxes and wagons that slag could be transported in were also used for coal transportation. The thrust of the government was 100 per cent on using these boxes for coal, leaving slag movement impacted. As a result Gupta said they had more than 5 lakh tonnes stored in their facility instead of reaching the cement plants where it could be used as raw material. Rationalisation of usage of boxes could solve this issue. The industry appealed to IR to pay greater attention to the needs of various types of cargo which need its services. DFCs: But much of these problems are to be solved by the dedicated freight corridors, which would allow cargo to move on high-speed corridors and leave the other tracks free for passenger traffic. The Government of India has taken up the construction of two Dedicated Freight Corridors (DFC) namely the Eastern Dedicated Freight Corridor (EDFC) from Ludhiana, Punjab to Sonnagar, Bihar (1,337 Km) and the Western Dedicated Freight Corridor (WDFC) from Jawaharlal Nehru Port Terminal, Maharashtra to Dadri, Uttar Pradesh (1,506 Km). Starting from scratch in 2014, 886 km of work (66.27 per cent) on EDFC, and 863 km of work (57.30 per cent) on WDFC has been completed (as on March 22, 2023). The remarkable progress can be gauged from a 9.6 times increase in expenditure incurred (including land for these projects) from Rs.103.57 billion in 2013-14 to `998.72 billion as on March 22, 2023. The Ministry of Railways announced earlier in December that construction of EDFC has been fully completed and 1,176 KM out of 1,506 KM of WDFC has been completed. These corridors are expected to boost industrial activities and facilitate the development of new industrial hubs and townships. The logistic sector will also benefit from the development of New Freight terminals, Multimodal Logistic Parks and Inland Container Depots creating direct and indirect employment in the project-influence areas. Station Upgrades: In August 2023, Prime Minister Narendra Modi laid the foundation stone for the redevelopment of 508 Railway Stations across the country via video conferencing. Redeveloped at a cost of more than Rs.244.70 trillion, these 508 stations are spread across 27 states and union territories, including 55 each in Uttar Pradesh and Rajasthan, 49 in Bihar, 44 in Maharashtra, 37 in West Bengal, 34 in Madhya Pradesh, 32 in Assam, 25 in Odisha, 22 in Punjab, 21 each in Gujarat and Telangana, 20 in Jharkhand, 18 each in Andhra Pradesh and Tamil Nadu, 15 in Haryana and 13 in Karnataka, among others. Adds Jaishankar of IIFCL, “Private investments need to more aptly complement and supplement the process. The first private development of a railway station – Rani Kamalapati in Habibganj has already happened. It is quite a successful model. We are the lead banker for that. This has to be followed by many other railway stations. Then there are the signal systems, the platforms, the rolling stock, and so on. There is ample scope for ushering in the PPP model. To the extent the immediate requirements are concerned, budgetary support is there. Scaling up will only happen if private sector participation is ushered in. I think that has to be the strategy for the railways. “ Locomotive production increased by nine times in the last nine years. Today 13 times more HLB coaches are being manufactured. Talking about the railway extension in the Northeast, the Prime Minister said, work is going on rapidly on doubling of the lines, gauge conversion, electrification and new routes. “Soon, all state capitals of the Northeast will be connected by railway network”, Mr Modi said. He informed that Nagaland got its second station after 100 years. “Commissioning of new railway lines in the region has increased three times”, he said. Vande Bharat Trains: The Railways used Rs.13.43 billion in procuring Vande Bharat trains. India’s first-ever indigenously designed and manufactured semi-high speed Vande Bharat trains has provided a modern and comfortable rail travel experience to passengers. High Speed, enhanced Safety standards and world class Service are the hallmarks of this train. Speed, Safety and Service are the hallmarks of this train. The Integral Coach Factory (ICF), Chennai, a Railways production unit, has been the force behind a completely inhouse design and manufacture, computer modelling and working with a large number of suppliers for system integration in just 18 months. High-speed trains: For speciality trains such as the bullet train between Maharashtra and Gujarat with a speed of over 320 km per hour, a separate organisation - National High Speed Rail Corporation has been created. This SPV with 80 per cent funding from Japan and the remaining 20 per cent to be shared by GoI (50 per cent) through the IR and the states of Maharashtra and Gujarat (25 per cent each) was incorporated in 2016 under the Companies Act 2013. The Mumbai-Ahmedabad High Speed Rail (MAHSR) project is coming up at an estimated cost of Rs.1.08 trillion, which will be executed with Official Development Assistance (ODA) Loan assistance from Japan International Cooperation Agency (JICA). For implementation of the project, a government to government cooperation agreement was formed between India and Japan to bring the Shinkansen technology to India and was signed in December 2015. This project also factors in non-fare revenues such as real estate development in three stations and cooperation with Municipal corporations to enhance the profile of localities around the stations. The rolling stock will be brought in from Japan and assembled in India. The IR is certainly moving faster than before. There is also a new urgency to investments in rail and ambitious 2030 and 2050 targets. Decades of neglected investment is being fixed through budgetary allocations. However, the IR needs to be more aligned to the ground realities. Early this month, the Union cabinet cleared seven railway projects to add 2,339 km at an estimated cost of Rs.32,500 crore to its existing network. It covers Uttar Pradesh, Bihar, Jharkhand, West Bengal, Telangana, Odisha and Gujarat. It include upgradation of existing railway lines, including doubling or quadrupling and will add capacity of 120 million tonnes of extra cargo, Ashwini Vaishnav, Railway minister, announced. The demand is definitely high. As R S Kalsi, Chairman - National Council on Auto & Auto Ancillaries, Assocham & Executive Board Member, Maruti Suzuki India, said, “each double railway rake was equivalent to 40 long haul trailers. With the average road distance of a trailer at about 1,600 km, by shifting to railways, they were able to eliminate 64,000 km of the trailer movement by road per trip. They had eliminated 2 lakh truck trips to date and reduced carbon emission by 66 million tonne. But even though the Darshana Jardosh, Minister of State for Railways & Textiles, announced that the effort was to shift even consumer cargo from road to rail, the industry still needs to see more clarification and policy tweaks for this to happen. Similarly, instead of leaving wagon procurement to the private sector, the IR has placed an order for 80,000 wagons. This again puts the burden on budgetary allocations. Private Partnerships: Explains Padmanabhan Raja Jaishankar, Managing Director, India Infrastructure Finance Company, “There is tremendous scope and potential for scaling up private partnerships. Because you have signals, platforms, high speed platforms, railway stations and services and the adjoining value capture that can happen because of all these things can be tremendous. It will all be a great booster for the GDP because everything is contributing to that. Today, roads are playing a great role. Railways can supplement this in a big way. Roads have some limitations because the capacities and tonnage they can take are limited. Railways can play a very big role in terms of tonnage and speed, with which it can bring great affordability into it. Today there are few airlines that are operating in the goods sector, railways can stabilise this and bring affordable pricing. “But for that they have to scale up. We need to also look at how the railway resources can be professionalised better. Ushering in the PPP mechanism is the key to scaling up the railways. As long as private investments supplement the government investments, you can leverage development with that. That’s good for the system in the sense that the fiscal deficit will be under control, overall rupee strength will increase and ratings will improve.” Manish Puri, President ATCO, said that to achieve 3,000 million tonne even at a growth was to be at 7-8 per cent, the IR would get stuck at 22-30 million tonne. For the incremental business from unconventional goods, not being carried on rail today, volumetric, lightweight, and manufactured goods would require multi modal means, transit sensitivity and a certain assurance of service. The railway system - both at the terminal and track level had to be upgraded. Enhanced private participation was flagged. The IR also needed to shed it regulatory approach and become more proactive to the private sector. Can the IR change its attitude and bring in the private sector as a partner in its progress? Can it get over its bulk cargo mindset? These are prerequisites to achieving the stiff target it has set for itself. Today finances have been allocated. CAn the IR become an agile organisation that will respond to the rapidly evolving requirements of a fast-growing economy? - E Jayashree Kurup

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