Indian Railways—on the route to reform?

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: The railways in India have been positioned for quite some time at a junction from which only one path could be said to have the potential to move the organisation towards success. Having taken other paths, the railways have only managed to maintain status quo. This year’s budget promises many steps towards the reform route, though there are plans which could derail the process.

Riding on a surplus wave, the minister attempts to sustain it. The increased efficiency of the system in terms of the various dimensions has provided the benefit. Studies, including those of the author, have shown this would indeed occur because of better capacity utilisation. The railways have realised this potential finally. For example, the move to get private sector containers on railway tracks is a good commercial strategy. Further, the plan to load more on a wagon would be equally useful. Equally important are the proposed discounts on freight movements during peak and non-peak seasons.

Of course, there are limitations to this potential. Unless significant investments are made, more benefits cannot accrue. To do this, the budget provides a clear outline of investment possibilities that are to be tapped. One such initiative relates to public-private participation in a number of areas. Though this will involve continued dependence on internal financing and budgetary support, the efficiency aspect of private sector participation is important. This may yield returns over a period of time. However, some of the investments on network expansion, double tracking, etc are expected to yield returns earlier.

Technological upgradation is a prime necessity. The budget provides for this approach by attempting to increase goods train capacity, which is expected to be doubled in five years. The plan is to introduce lighter wagons to be moved at a much higher speed. Higher speeds would be possible in the new freight corridors to be constructed at a massive cost of Rs 22,000 crore, linking the major metropolitan cities. This would also help in segregating passenger movements. Emerging competition from road transport in this segment cannot be met effectively in any other way.