The railway sector has undoubtedly been one of the key focus areas of the government for several years. It is aiming to transform Indian Railways (IR) through four key strategies – expanding capacity and modernising infrastructure, improving the customer experience, focusing on safety, and achieving financial self-sustainability.
To this end, IR has made considerable investments in network expansion and modernisation works over the past couple of years. The modernisation of track infrastructure and installation of new signalling technology have been IR’s top priorities. The government has also begun to focus on the timely completion of the Eastern and Western Dedicated Freight Corridors (DFC). Further, IR is taking steps to develop rail connectivity in the Northeast, improve last-mile connectivity, expand rolling stock, and improve energy efficiency in the railway system. In addition, a number of policy initiatives are being taken to promote the ease of doing business and increase revenues earned from the freight business.
Nonetheless, much more needs to be done in areas such as developing rail-based multimodal logistics parks, stations and freight terminals; increasing rolling stock, improving safety, and increasing the speed of freight and passenger trains. Technology upgradation in terms of tracks, bridges, signalling and telecommunication systems, etc. is also urgently required.
Key trends and developments
As of March 2016, IR‘s network comprised a total track length of about 119,578 km over a route length of 66,687 km. Growth has not been significant with the route network and track km growing at a meagre compound annual growth rate (CAGR) of 0.8 per cent and 0.97 per cent, respectively, during the past five years (2011-12 to 2015-16).
Over the years, the share of the railways in freight and passenger transport has been declining and road transport is emerging as the predominant mode. The railways’ share in freight traffic has fallen from 89 per cent in 1950 to 31 per cent in 2016, due to several issues such as inadequate infrastructure, regulatory and commercial hurdles, and lower industrial demand. At the same time, its share in passenger traffic declined from 70 per cent in 1950 to a mere 10 per cent in 2016.
The modal share of IR in freight transport is much lower relative to large countries such as the US and China which have a close to 50 per cent share. Between 2011-12 and 2015-16, freight traffic showed an upward trend, increasing at a CAGR of 3.3 per cent, while freight earnings increased at a CAGR of 12.2 per cent during the period.
Indian Infrastructure highlights some of the major trends and developments in the railway sector…
Trends in traffic and earnings: During 2015-16, while freight traffic crossed 1,100 million tonnes (mt), recording a CAGR of 3.23 per cent during the period 2011-16, passenger traffic touched 8,152 million. Between April 2016 and February 2017, IR recorded freight and passenger traffic of 998 mt and 7,525 million respectively.
During 2015-16, freight earnings crossed Rs 1,000 billion, while passenger earnings touched the Rs 440 billion mark. During 2011-16, passenger and freight earnings increased at a much faster pace than traffic figures at a CAGR of 11.89 per cent and 12.11 per cent respectively.
Between April 2016 and February 2017, IR recorded freight and passenger earnings of Rs 938 billion and Rs 421 billion respectively.
Improvement in fixed assets: With regard to network expansion, during the Twelfth Five Year Plan period (2012-17), about 16,345 km of network expansion and decongestion works have been implemented by IR (till December 2016), 11 per cent and 97 per cent higher than the aggregate progress achieved during the Eleventh Plan (14,752 km) and Tenth Plan (8,319 km) respectively. New line construction has increased over the last three plan periods, and so has line doubling and electrification. Gauge conversion is still lagging behind with only 3,626 km achieved during the Twelfth Plan (2012-17) (till December 2016), as compared to 5,290 km during the Eleventh Plan period.
For 2016-17, IR had set a target of 400 km of new lines, 1,600 km of line doubling, 800 km of gauge conversion and 2,000 km of electrification. Until December 2016, at least 423 km of new lines, 532 km of doubling, 695 km of gauge conversion and 745 km of electrification works (October 2016) had been implemented by IR.
Growth in rolling stock: Overall, between 2012-13 and 2016-17 (till October 2016), the year-on-year growth in rolling stock witnessed a declining trend, except for the year 2015-16, when the production of wagons recorded the maximum growth rate of 32.5 per cent, followed by coaches at 6.78 per cent and locomotives at 0.83 per cent.
During the five-year period, a total of 17,651 coaches, 2,895 locomotives and 52,148 wagons were acquired by IR. Major reasons for the decline in acquisition of rolling stock include slow progress in upcoming manufacturing units and reduced rolling stock requirements vis-à-vis available manufacturing capacity.
Focus on improving average speed of trains: In the past few years, IR has undertaken several initiatives to improve the average speed of existing freight and passenger trains as well introduce new semi-high speed and high speed trains. In April 2016, IR launched its first semi-high speed rail, Gatimaan Express, on the Delhi-Agra route. The train runs at a speed of 160 kmph covering the 200 km distance in approximately 100 minutes.
Further, IR announced four new categories of trains – Tejas, Uday, Antyodaya and Humsafar – under Mission Raftaar to raise the average speed of trains. The Tejas trains will be faster than the Shatabdis, and will be certified to run at a maximum speed of 160 kmph and a guaranteed speed of 130 kmph on select routes. In September 2016, the Spanish Talgo train completed its final trial run between Delhi and Mumbai in just under 12 hours at a speed of 200 kmph. IR plans to lease two to five Talgo trains from the Spanish manufacturer in 2017.
Further, the Gujarat government has signed a Rs 770 billion MoU with High Speed Rail Corporation of India Limited for a high speed bullet train to run between Mumbai and Ahmedabad. The train will cover the 508 km route in two hours, running at a maximum speed of 350 kmph and operating speed of 320 kmph. The project, to be largely funded by the Japan International Cooperation Agency (JICA) (about 81 per cent), is expected to be completed by the year 2023.
Focus on energy efficiency: To manage its energy costs, IR is undertaking a number of initiatives such as procuring cheaper power, improving the efficiency of power utilisation, enhancing its renewable energy capacity and engaging in power trade. Instead of relying on state discoms, IR has operationalised its deemed licensee status. The organisation has started sourcing some of its requirements through a competitive tender/auction directly from power producers. With these efforts, the average rate of power procurement reduced by around 35 per cent in 2015-16, when IR‘s electricity expenses declined by Rs 13 billion.
IR has managed to reduce specific energy consumption in traction by deploying energy efficient rolling stock with three-phase technology, regenerative braking systems, capacitor banks for power factor improvement, microprocessor-based energy meters, high horsepower (HP) locomotives (9,000-12,000 HP), etc.
Recently, in January 2017, IR announced Mission 41k to save Rs 410 billion in the next decade in energy costs through the electrification of an additional 24,000 route km in the next five years and doubling of the current rate of electrification to about 4,000 km per annum.
Improving safety standards: In the past few years, IR has undertaken several initiatives to improve passenger safety. The total number of accidents decreased by almost 20 per cent, from an average of 135 between 2009 and 2014 to 107 in 2015-16. At the same time, the number of casualties declined from an average of 693 between 2009 and 2014 to 309 in 2015-16. Further, the number of unmanned level crossings eliminated by IR increased by 10 per cent from an average of 1,139 between 2009 and 2014 to 1,253 in 2015-16. Besides, the number of rail overbridges/underbridges constructed by IR increased from an average of 762 between 2009 and 2014 to 1,024 in 2015-16, an increase of almost 35 per cent.
The way forward
The railway sector is poised to achieve a higher growth rate in the coming years on account of a number of initiatives undertaken by IR to improve efficiency and service delivery. The timely completion of big-ticket projects – the DFC and high speed rail – and meeting expansion work targets will play a crucial role.
Going forward, huge investments are required to upgrade and expand the network, induct new technology, improve safety standards, acquire and manufacture rolling stock, and electrify the rail network. Since budgetary resources are limited, IR is exploring new and innovative funding options – tapping multilateral agencies (such as JICA and the World Bank for low-cost long-term funds), financial institutions (such as the Life Insurance Corporation of India), and public sector undertakings (such as Coal India Limited and NTPC for the construction of rail networks). In addition, there will be greater focus on increasing non-fare revenues through land monetisation, sale of soft assets (like data on passengers, ticketing pattern, commodity flow, etc.) and development of land along tracks, advertisements, overhaul of the parcel business, and revenues from manufacturing units.