Getting Railways back on track

Written by Raghu Dayal | Raghu Dayal | Updated: Jun 26 2014, 07:42am hrs
Accustomed to doling out freebies and largesses at the expense of public exchequer for their own partisan gains, most of the countrys politicians play to the gallery and incite people against any sane attempt made by the government towards course correction. It is sad that petty politicians succeed in playing perilous games, inflicting severe blows to the health of nations iconic lifeline that its railways signifies. The orchestrated crescendo of protests against the 14% rail passenger fare hike is patently misconceived, also mischievous. Strangely, the rail minister has been inexplicably apologetic, and has succumbed to the pressure to partially roll back the fare hike, signalling that the government can be pushed around. Indian Railways (IR) incurs an annual loss of R30,000 crore on its passenger business; it doesnt even put out a white paper to explain the debilitating effect of such an untenable case to the people. One former rail minister doesnt question the fare increase; he would have liked it announced in the ensuing Rail Budget. Rail passenger fare or freight charge is no tax, it reflects only a price of service that IR provides; it needs no Parliament approval. Further, the pertinent issue is why a separate Rail Budget at all; in the current context, a Rail Budget is an anachronism and irrelevantit needs to be dispensed with straightaway.

Of late, it has been IRs ill-luck that it has been asked by regional politicos, catapulted to the role of presiding deities in Rail Bhavan, to deliver with its arms firmly tied. With maniac obduracy, these satrapsobsessed with populism, to nurture their narrow, partisan interestspermitted no increase in lower class passenger fares for a decade. They couldnt care that, devoid of essential infusion of capital and technology for its sustenance and development, the system would decay. The second-class fare, largely responsible for loss-making, remained ludicrously low at 15.8 paise per km in 2010-11, and suburban travel still lower, at 12 paise per km. In comparison, the bus fare on state transport services averaged 62 paise per km. The second-class rail fares moved from 100 in 1993 to 106 in 2011 vis--vis WPI from 100 to 295. The PPP-adjusted rail passenger fare-box yield (2010) in India is equivalent of $0.006 compared to $0.024 in China, $0.052 in Russia, $0.126 in Germany, and $0.19 in Japan. Just to break-even, rail fare increase required is of the order of 400% for ordinary sleeper class, 125% for ordinary second-class, 75% for mail and express second-class, and 150% for suburban services.

Passenger services aggregated 61% of IRs total traffic units (passenger km and freight tonne km) in 2010-11 and freight 39%, but earnings were inversely proportionate: R25,706 crore coming from passenger traffic versus R60,687 crore from freight. While net freight train earnings averaged R599.91 per km, passenger trains caused an average net loss of R334.68 per km. IR has the dubious distinction of worlds lowest average passenger fare realisation, with worlds highest price for freight per tonne km. Fare-freight ratio on IR is worlds lowest (0.27) compared to 1.4 in South Korea, 1.3 in France, 1.2 in China, 0.9 in Malaysia and Indonesia and 0.7 in Thailand. Indias passenger yield, PPP-adjusted, is 11% of that of Japan, 15% of Germany and Russia and 37% of China.

Constant cross-subsidisation has rendered IRs freight rates too high, resulting in diversion of traffic to sub-optimal non-rail modes. Let those worthies who chant the rail fare hike hurts aam aadmi understand that increases in freight charge do, in effect, impact goods including grain, salt, fuel, etc, essential for daily needs of the poorest even in remote locales, where they may in no way be concerned with rail travel.

With IR finances haemorrhaging, there is little left for investment to increase capacity, induct new technologies, and provide for essential wherewithal to improve and modernise services. The countrywide scramble at train accommodation along with the melee of men, women and children jostling into cramped compartments at stations signifies the ramshackle state of nations rail assets and endemic shortage in supply. While there is an insatiable clamour for more trains, IRs arterial routes remain choked, its seven high density corridors stretched over 10,500 km remain clogged, its stations and maintenance facilities over-stretched, speeds low, and services far less than satisfactory.

Rail travel demand far outstrips supply, and remains set to grow substantially in view of countrys continental distances, its rapidly growing middle class, urban population projected to rise from the current 286 million to 575 million by 2030, and social and religious mores keeping the footloose population on the move. Indias per capita passenger mobility increased from 100 km in 1950 to 3,020 km in 2000 at a 5.13% CAGR versus per capita GDP at 2.23% CAGR. As overall passenger traffic during 1950-2008 increased 63-fold, rail share rose 11-fold against roads 212 times, and airs 168-fold. More people are travelling now, and are travelling more. The average distance of rail journeys of suburban passengers more than doubled from 15.9 km in 1950-51 to 33 km in 2010-11, and of non-suburban passengers more than tripled from 68.8 km in 1950-51 to 234.4 km in 2010-11. As people get richer, they travel more for business, leisure, tourism and pilgrimage.

Regional imbalances in the economic growth leading to migration of workers from poorer regions to more promising regions would perforce generate considerable travel. With its working population aggregating 455 million, and consuming class increasing at the rate of 10% annually, the number of middle class households (annually earning R2 lakh to R1 crore) is slated to increase fourfold or more, from 32 million to 147 million, by 2025. As declining agriculture drives migration from rural areas, IR needs to facilitate large numbers to travel long distances cost-effectively for an integrated national labour market.

IR needs to garner adequate resources for developing a whole panoply of infrastructure and equipment as well as the software of passenger travel; for operational and maintenance requirements; design and production of coaches and locomotives including twin-deck units; innovative designs, systems and services for booking and reservation; facilities at stations and on-board, from disposal of waste to standardised meals served hygienically. The Sam Pitroda and Anil Kakodkar committees argued for an investment in IR of the order of R6.6 lakh crore over a five-year period. If India builds up the courage to construct some high speed bullet train corridors, it has to provide for resources at the rate of a minimum of R100 crore per km of track for such trains. Whom will the politicians like to rob for this scale of finances, if they rise in protest at the long-overdue 14% fare hike, which can fetch for IR just about R6,000 crore over a year.

The critical area is medium and long lead passenger travel. IR needs to (1) substantially upgrade and expand long distance (over 1,000 km) trains, aiming at 200 kmph operation on post-dedicated freight corridor mixed traffic routes, completing 1,500 km Delhi-Mumbai and Delhi-Kolkata journeys, for example, within 12 hours; (2) operate daylight Shatabdi-type fast services, distances up to, say, 500 km being covered within 200 minutes; and (3) expand and accelerate overnight medium distance (500-1,000 km) trains like the many popular services IR operates in this segment, besides the other longer distance inter-city mail/express trains. It appears essential and logical that IR moves really fast forward towards selected high speed (over 250 kmph) corridors.

Like China Railways separated passenger and freight businesses, raised passenger fares by 75% between 1994 and 1998, discouraged short distance passenger traffic, reduced travel time of trains by increasing service speeds and reducing train stops, invested heavily to transform its entire infrastructure to be worthy of emulation for state-of-the-art services, IR has its task laid out: (1) its capacity to expand exponentially, for garnering at least 25% share of total passenger traffic, up from the current 10% level; (2) its passenger and freight businesses be managed as separate business units for requisite accountability, focus and thrust; (3) fares to rationally reconcile affordability by the bottom of the pyramid with the imperative of viability of the organisation; and (4) intra-urban, regional and other stopping commuter services be hived off and managed multi-modally by an autonomous corporate body in close cooperation with state governments. Total daily average of about 12,000 passenger trains include 4,200 short-distance non-suburban regional services, which need to be drastically curtailed and reorganised. They incur heavy losses and erode route capacity. An autonomous corporate entity, put in place under the IR umbrella, would be better equipped to manage all sectional/regional passenger services including specific short distance suburban streams.

Carrying over 22 million passengers on some 12,000 trains across the countrywide network, in addition to 7,000 freight trains each day, IR significantly touches the lives of all Indians and naturally raises their expectations. Its iconic services knit the vast and diverse landsuch as the Vivek Express completing a 4,278-km journey from Dibrugarh to Kanyakumari; same way the 75-hour, 3,745-km journey by Himsagar Express from Jammu to Kanyakumari; or the Dwarka Express hurtling along a 3,296-km stretch from Guwahati to Okha. They all testify what Paul Theroux perceived, The railway possessed India and made her hugeness graspable. An institution of such great importance needs to be appropriately nurtured and supported.

The author was the first MD of the Container Corporation of India Ltd