Abuzz with Activity: Recent developments in the railway sector

Recent developments in the railway sector

A host of enabling initiatives have been introduced in the railway sector in the past year. Several policy initiatives have been taken by Indian Railways (IR) to promote the ease of doing business and increase revenues earned from the freight business. Improving passenger safety and convenience of travel is also key among the recent focus areas.

Tariff rationalisation

The central government has reportedly approved the setting up of the Rail Development Authority to regulate tracks where IR and private players will operate. The authority will also recommend passenger fares and freight charges. Freight rates for coal traffic have been rationalised to promote long-distance transportation and have been lowered by 4-13 per cent for distances above 700 km. In a bid to provide economical and reliable alternative short lead traffic, a rationalised scheme with lump-sum rates for the merry-go-round system has been notified by IR with effect from April 1, 2016. The port congestion surcharge, which was levied at 10 per cent on basic freight, has been withdrawn with effect from April 13, 2016. The withdrawal of the dual freight policy for iron ore with effect from May 10, 2016; the reintroduction of short lead concessions and a reduction in the minimum distance from 125 km to 100 km for pricing with effect from July 15, 2016; and the withdrawal of busy season charge for traffic loaded in bogie covered and bogie covered new metric high axle load wagons from May 1, 2016 to June 30, 2016 are some of the other initiatives. Besides, the Station-to-Station Rate Special Freight Rate Policy and the charging of commodities for transportation by containers has been liberalised – 43 additional commodities have been denotified for charging at FAK (freight any kind) rates and two-point booking of covered wagons has been permitted for any two stations within a distance of 200 km in the busy season and 400 km in the lean season.

Dynamic pricing

In a bid to augment its passenger revenues, IR introduced dynamic surge pricing on a pilot basis for the Rajdhani, Duronto and Shatabdi trains with effect from September 9, 2016. The new ticket pricing method is applicable for the 2AC, 3AC, chair and sleeper classes. Under the new “flexi fare system”, the base fare of tickets will increase with rising demand. While the first 10 per cent of the seats will be sold at the normal fare, the base fare will increase by 10 per cent with every 10 per cent of the berths sold. Fares can go up to a maximum of 1.5 times the original base fare. Once half the tickets are sold, the rest will be sold at 1.5 times higher base fares for 2S, sleeper and 2AC coaches, and 1.4 times higher for 3AC coaches.

IR has also decided to offer a 10 per cent rebate in the base fare on vacant berths/ seats for all trains, after the preparation of the first chart, with effect from January 1, 2017 on an experimental basis for six months. Discounted fares for two Shatabdi trains – the New Delhi-Ajmer Shatabdi Express and the Chennai Central-Mysore Shatabdi Express – have been introduced.

Focus on seven missions

In Rail Budget 2015-16, IR announced seven missions to increase efficiency in its operations. These missions, each headed by a mission director, will be implemented over the next five years. Mission 25 Tonne aims to increase revenues by augmenting the carrying capacity of wagons. To achieve this, IR has set a target to move 10-20 per cent of freight traffic on 25-tonne axle load wagons in 2016-17 and 70 per cent by 2019-20. As of October 2016, a total of 15,845 25-tonne axle load wagons are in operation in select circuits on East Coast Railway, South Eastern Railway and South East Central Railway. Mission Zero Accident aims at the elimination of all unmanned level crossings, Mission Hundred aims at commissioning at least 100 sidings in the next two years, Mission Capacity Utilisation proposes to prepare a blueprint for making full use of the huge new capacity that will be created through the two dedicated freight corridors between Delhi and Mumbai and Delhi and Kolkata scheduled to be commissioned by 2019. Mission Raftaar targets doubling the average speed of freight trains and increasing the average speed of superfast mail/express trains by 25 kmph in the next five years. Mission Pace aims at enhancing consumption and procurement efficiencies by adopting practices such as vendor management inventory, direct procurement of diesel, etc. Under Mission Beyond Bookkeeping, IR aims to establish an accounting system where outcomes can be tracked in relation to inputs to ensure accurate accounting and costing and hence right pricing and outcomes.

Passenger amenities

The Ministry of Railways (MoR) has recently launched several policy initiatives to augment non-fare revenue collections and promote the ease of ticketing through digital transactions. These policy initiatives include the launch of the Non-Fare Revenue Policy; Out of Home Advertising Policy; Train Branding Policy; Content on Demand and Rail Radio Policy; ATM Policy; and other initiatives promoting the ease of ticketing through digital transactions. The policies have been based on feedback from key industry players. This feedback includes maintaining long-term contracts of around 10 years; single point of contact with the non-fare revenue directorate; a transparent e-auction process; and better media planning for railway assets allowing zone/train/station-wise packages. With the aim of ensuring ease of ticketing, the MoR launched the IRCTC Connect App while offering additional payment options on the UTS-on-Mobile app.

A facility to purchase unreserved tickets  through mobile phones has been introduced on select sections. SMS alerts for cancellation of trains and automatic refund of confirmed e-tickets upon train cancellation and destination alert services have been introduced. The advance reservation period has been increased from 60 to 120 days. Currency-operated automatic ticket vending machines have been installed at Delhi and Mumbai stations. The MoR has also launched the New Catering Policy, 2017 and a new partnership in the parcel business with the Department of Posts. The new catering policy aims to delink food production and distribution by assigning the task of managing the catering service on all mobile units and base kitchens to the Indian Railway Catering and Tourism Corporation while offering opportunities to special women self-help groups for preparing meals. The new partnership with the postal department will enable private players to book space on trains for the movement of their business parcels.

With regard to passenger safety and cleanliness, a total of 344 railway stations have been provided with CCTV cameras. Besides, cameras have been installed in 25 passenger coaches and 32 suburban coaches. The On-Board Housekeeping Services Scheme has been introduced on all Rajdhani, Shatabdi, Duronto and other important long distance mail/express trains. As of October 2016, over 49,000 bio-toilets have been installed in passenger coaches.

Railway station redevelopment

The MoR has launched Phase I of the Station Redevelopment Programme comprising 23 major railway stations, for which feasibility studies have already been undertaken. These are Allahabad, Mumbai Central, Bandra Terminus, Bangalore Cantonment, Bhopal, Yesvantpur, Faridabad, Secunderabad, Pune Junction, Kozhikode, Thane Junction, Udaipur City, Ranchi, Vijayawada, Lokmanya Tilak Terminus, Kamakhya, Kanpur, Howrah, Indore, Jammu Tawi, Borivali, Visakhapatnam and Chennai Central. Under this phase, IR will be providing around 140 acres of encroachment-free land to developers on a lease of 45 years. The programme is expected to entail an investment of between Rs 60 billion and Rs 90 billion. After Phase I, IR will launch the redevelopment of over 100 stations under Phase II. The remaining 277 stations under the A1 and A categories will then be launched under Phase III of the programme. Meanwhile, Bansal Pathways Habibganj Private Limited has achieved financial closure for the redevelopment of the Habibganj station. The project for the redevelopment of the Gandhinagar railway station has also been launched recently.

Three schemes focusing on the modernisation and upgradation of railway stations – the Model Station Scheme, the Modern Station Scheme and the Adarsh Station Scheme – have been launched. Under the Model Station Scheme, 594 stations are being provided with separate waiting halls for upper-class and second-class travellers, improved circulating area, train indication board, adequate lighting, etc. Under the Modern Station Scheme , 637 stations have been developed with modern facilities such as good seating arrangements, waiting halls, improved platform surface, signage, etc. About 992 railway stations have been upgraded under the Adarsh Station Scheme. During 2014-16, IR introduced 365 new trains, 99 extensions and 1,610 additional coaches. The frequency of 118 trains was also increased. Trains with special fares over and above timetabled trains have been introduced to facilitate decongestion and augment passenger services. The MoR has recently launched the country’s first Antyodaya Express running between Ernakulam and Howrah and the Sri Ganganagar-Tiruchirapalli Humsafar Express.

Freight sector initiatives

The MoR has introduced several freight sector initiatives which include the policy of “long-term contracts” with major customers aimed at providing certainty with respect to long-term tariff/freight rates to customers, while also guaranteeing incremental volume of traffic to the railways; the Indian Railways Freight and Passenger Business Action Plan 2017-18 that details 50 actionable initiatives covering IR’s core business segments of passenger and freight; trial run of double-stack dwarf containers aimed at regaining the lost modal share and attracting additional traffic; and the demonstration run of roll on, roll off services across the National Capital Region, IR’s pilot project for “green transportation” to reduce congestion and improve the environment.

Developments in high speed rail

The high speed rail (HSR) segment also reported significant activity. The central government has given the green signal to the realignment of the Mumbai-Ahmedabad High Speed Rail Corridor Project to include Pune and Nashik, on account of the availability of sufficient land in these regions and the exchange of a piece of land at the Bandra Kurla Complex for building a terminus for the HSR corridor. The Gujarat government has further signed an MoU with National High Speed Rail Corporation Limited for the implementation of the project, under which 70 per cent of the total project cost will be invested in Gujarat (including the manufacturing of components for the HSR in the state). Meanwhile, consultants are undertaking feasibility studies for five high speed corridor projects – Delhi-Mumbai, Mumbai-Chennai, Delhi-Kolkata, Delhi-Nagpur and Mumbai-Nagpur. The final reports are expected to be submitted this year.