Although privatisation is a significant reform initiative, the Railways needs to make its passenger business viable, and work on making rail travel a preferred mode
In what is being hailed as a “historic” measure signifying a paradigm shift, Indian Railways (IR) has invited private investors to operate 151 passenger trains on 109 selected routes across its network. The belated initiative would impact only a minuscule “upper class” segment of its passenger business, the overwhelming component of lower-class passenger services would remain beyond the ambit of the scheme the way it has been envisioned.
Important in this context is to first comprehend the structure of IR’s passenger business. It operated a daily average of 13,523 passenger trains in 2018-19, which included 3,695 inter-city mail and express services, 3,947 ordinary short-distance-stopping “regional” trains, and 5,881 electrical multiple units operated on suburban sections for intra-city passengers. The regional/sectional trains, with multiple stops, cater to short-distance journeys (an average of 111 km in 2018-19) and contribute maximum loss in passenger business. It is only the inter-city mail and express services that constitute IR’s core passenger business, which need to be duly nurtured and developed. Again, within this category, only the upper-class portion will be of interest to private operators, especially in view of flexibility in fixing fares.
It is, thus, essential to analyse the project in terms of its overarching aims and objectives, namely, reducing the supply-demand deficit, encouraging modal shift from air to rail, and significantly reducing transit time.
Passenger ridership on railways has almost been stagnant—increasing by just 0.8%, from 8,286 million in 2017-18 to 8,354 million in 2018-19, and projected to record a paltry 0.9% increase in 2019-20, to 8,428 million. The Railways’s endemic capacity crunch has kept its share in the nation’s transport market steadily dwindling. While there is an almost insatiable clamour for more trains, its seven high-density corridors stretched over 10,500 km remain clogged; its stations and maintenance wherewithal are over-stretched; speeds remain low and services far less than satisfactory. Rail travel demand far outstrips supply and remains set to further grow substantially in view of the country’s sprawling geography, its rapidly growing middle-class and urbanisation, and goal of environmental conservation. The steadily growing services sector continues to trigger high mobility and demand for passenger travel, generally in the upper classes.
Today, more Indians are travelling, and are travelling more. The country’s overall passenger traffic rose from 102 billion passenger-km in 1950-51 to 3,536 billion pkm in 2000-2001, annual average distance traversed by countrymen increasing from 385 km to 3,470 km, 449 km by rail and 3,021 km by road. The road share in passenger mobility increased from 35% in 1950-51 to 87% in 2000-2001.
Transfer of traffic to rail will depend not only on reduced journey time but also on the frequency of rail services, offering accommodation on demand. As technologies evolve and people’s aspirations explode, rail travel needs to appropriately match air and road services in terms of pre-board and onboard convenience, reliability, and speed. Facing a severe competition from budget airlines, high-capacity buses, and personal cars, IR needs to craft a concerted strategy to expand, accelerate and modernise its inter-city passenger services.
The demand for quality services is highly income-elastic; it grows faster than the total demand. Since the advent of low-cost carriers in the country, the number of air passengers, which constituted about 1% of upper-class rail passengers in 1950-51, rose to over 78% by 2018-19 (40m domestic air journeys in 2019 vis-à-vis 179m upper-class rail riders in 2018-19). While the number of overall non-sub-urban rail journeys increased by CAGR of 3.49% and passenger-km by 5.77% during 2000-01 and 2018-19, upper-class rail journeys were up by 8.68% and pkm by 9.12%.
Railway minister Piyush Goyal’s belief that private sector participation would enable IR to get past the “era of slow-moving trains” appears misplaced. Despite a stellar initiative it pioneered 50 years ago by way of the “high speed” inter-city Rajdhanis, freight as well as passenger trains across the network have remained stuck in slow tracks over decades. Take the “pilot project” of IRCTC-operated upscale “Tejas” train-sets on Delhi-Lucknow and Mumbai-Ahmedabad routes which clock virtually the same travel time, around 6.5 hours each way as the older Shatabdis on these routes.
Railway Board Chairman Vinod Kumar Yadav explained how, on completion of the two ongoing DFCs by December 2021, and the contemplated up-gradation of existing Delhi-Mumbai and Delhi-Kolkata rail routes at the cost of Rs 13,000 crore will see trains running at 160 km/h. Yet, most other paths with mixed freight and passenger trains jostling for space and constrained by speed limits will only lead to the new train-sets to be substantially under-utilised in terms of their potential, and at far below expectations of customers for faster and frequent services.
Private trains will account for a minuscule part of passenger trains. Nevertheless, the deployment of the proposed 150 technically superior and faster train-sets operated by the private sector is expected to give railways’ passenger services a facelift, ushering in competition in the upper class segment of its passenger business.
While lauding the initiative, one can’t ignore several red flags visible along the route: the big thorny issue is the absence of an autonomous regulator, vital for the equitable and effective functioning of the private operators. It is not without a challenge that the private train operators will strive to provide value for money to passengers and ensure their profitability in an environment of a price war. Air travel in the country was transformed following the entry of low-cost private air carriers, which enabled the domestic air travel to go through a metamorphosis; domestic air travel rose from 14m in 2000 to 139m in 2018—a ten-fold increase. Ask the licensed container train operators how they have encountered roadblocks in their performance with the Railways alone driving policy and settling disputes.
Additionally, plausible questions also arise, for example, regarding a 35-year concession in an age of rapidly evolving technologies impacting design contours of train-sets as much as customer expectations and aspirations, and taking a plunge in 100 paths without first testing the waters on few selected sections.
The Covid-19 catastrophe has gifted a rare opportunity for IR to redesign and reorganise its passenger business. Some structural shifts in IR’s business management are now a clear imperative: segregating its passenger and freight businesses for focussed attention, restructuring the tariffs rationally, and urgently, developing terminal infrastructure, leapfrogging the conversion of the existing dual-use high demand trunk routes into semi high-speed corridors.
Rail travel in terms of amenities and speed has improved over time. However, the major beneficiaries in the limited improvements so far are the passengers travelling in reserved accommodation. The worst-affected segment comprises medium and long lead Second Mail & Express class passengers travelling without reservation in a limited number of heavily crowded general coaches.
IR needs to strategise the development of its core business segments— the daylight and overnight inter-city services, as well as longer lead rail travel in upper as well as second classes. It must not rush to resume ‘regional’/short distance services; instead, strategically discourage/de-incentivise the short distance non-suburban segment; and earnestly push to corporatise the ‘regional’ and suburban services to be operated, in a multimodal milieu, by autonomous entities in concert with respective state government agencies.
The author is Senior fellow, Asian Institute of Transport Development, Delhi