Off Track: Huge investment required to meet line construction targets

Huge investment required to meet line construction targets

A railway network represents the total km covered by railway lines. Indian Railways’ (IR) network in terms route km has increased from 64,600 km in 2012 to 66,687 km in 2016, posting a compound annual growth rate (CAGR) of only 0.8 per cent. The CAGR looks dismal. However, the decadal track addition between 1951 and 2010 was 2,093 km, while in this decade, 3,360 km of track length has already been added. Of IR’s network, 90 per cent is broad gauge (about 60,510 km), about 6 per cent (3,880 km) is metre gauge, and the remaining 4 per cent (2,297 km) is narrow gauge. At present, about 43 per cent of the country’s route network is electrified.

Among states, Uttar Pradesh has the longest network in terms of route km at 9,077 km. Others with over 5,000 km of network are Rajasthan, Maharashtra, Gujarat and Madhya Pradesh. During 2014-15 and 2015-16, IR commissioned a total of 4,800 km of broad gauge lines, compared to an average of about 1,530 km and 1,477 km commissioned during 2009-14 and 2004-09 respectively.

During the period 2011-12 to 2014-15, the target for new line development was revised downwards from 700 km in 2011-12 to 300 km in 2014-15. This was primarily because of a paucity of funds, a change in focus to network decongestion rather than network expansion, and due to a backlog resulting from a lower completion rate in the past. In contrast, the target for new line development for 2015-16 was set at a slightly higher level of 500 km. In terms of achievement, targets for the past five years have been met. In fact, the achievement in 2015-16 was 63 per cent above the target. In 2016-17 (till December 2016), IR commissioned about 423 km of new lines, thereby meeting 106 per cent of the target.

Gauge conversion is the quickest way of increasing the railways’ carrying capacity. During the three-year period from 2011-12 to 2013-14, the targets for gauge conversion were revised downwards. Post that, there was a 20 per cent and 78 per cent year-on-year (YoY) increase in the 2014-15 and 2015-16 targets respectively, again clearly indicating the change in priority from network expansion to network decongestion. With regard to the actual works, surpassing the targets has been a recent trend, the highest level being witnessed in 2014-15 (196 per cent). Achievements for 2016-17 (till December 2016) are estimated at 87 per cent.

Typically, network decongestion through doubling works entails lower investments in comparison to new lines. During the four-year period from 2011-12 to 2014-15, the targets for doubling were revised downwards and remained in the range of 700-750 km. After that, there was a 70 per cent and 33 per cent YoY increase in the 2015-16 and 2016-17 targets respectively. With regard to the actual progress, targets have been met for the period under consideration, except for 2015-16, when achievements were short by 20 per cent. In financial year 2016-17 (till December 2016), IR has undertaken about 532 km of line doubling works, thereby meeting 33 per cent of the target. IR’s proposed investment in network expansion and decongestion till 2019-20 is over Rs 4 trillion, about 45 per cent of the total investment plan.

Investment requirement and outlook

A total of about Rs 2,000 billion is estimated to be needed for decongesting the network. According to IR, a major part of this amount will be raised through extrabudgetary resources, including the implementation of projects on a public-private partnership basis. A substantial portion of the investment will be made towards laying new tracks for dedicated freight corridor projects, both ongoing and upcoming. Besides laying new tracks, the modernisation of existing tracks will also be a key focus area in the future. The Expert Group on Railways has recommended the modernisation of 19,000 km of existing track length to carry heavier freight trains of 25 tonne axle load at higher speeds of 75-100 kmph and the elimination of all level crossings. During 2017-18 and 2018-19, IR plans to add about 800 km of new lines and undertake the doubling of 5,100 km and gauge conversion of 1,600 km of railway network. In addition, about 4,200 km of route length will be electrified during the two-year period. To expedite network expansion and decongestion works, IR has set a target to lay an average of 9.6 km of track per day in 2017-18 and 11 km per day in 2018-19. With the network expansion and decongestion plans on the anvil, there will be significant business opportunities that contractors, consultants, equipment and technology suppliers, material suppliers and other ancillary market segments can take advantage of.