Millennium Post

Train of thought on track and wheels

A momentous decision by Prime Minister Narendra Modi government, allowing 100-per cent foreign equity in big-ticket projects of Indian Railways for the first time, can prove a game-changer for the 160-year-old network in India that was seen floundering in recent decades due to a mix of issues, notably political populism, lack of clarity in executing its social obligations and paucity of funds.

India boasts one of the oldest railroad networks in the world and also among the largest, ferrying some 23 million people, or a population the size of Australia, on its coaches each day. But this long journey, since the first train service was launched in 1854 between Bombay (Mumbai now) and its suburb Thane, somewhat lost velocity.

The outcome, accordingly, proved disastrous. Rail-related accidents kept mounting as allocation of money for safety became a victim of irrational tariff regimes, with successive governments subsidising ordinary passenger travel by freight earnings and premium tickets. The rail infrastructure, too, suffered as new trains kept being added without much thought on expansion and modernisation.

Little wonder, a commonly used parameter to measure the efficiency of a railway system -- the operating ratio, which tells the percentage of revenues that goes into day-to-day operation and maintenance -- suffered immensely.

This ratio for Indian Railways declined to an unsustainable level of over 95 per cent in 2010-2011 from around 80 per cent in the 1950s. This is one of the worst globally. A figure of 75-80 per cent or lower is what is seen as a healthy benchmark.

Cut to January 2014. Prime Minister Modi, who led his Bharatiya Janata Party (BJP) to victory in the recent national elections, promised to the people something they had never imagined could ever be implemented in India.

‘We have such a huge rail network. But it is our misfortune that no attention is paid to the railways in the country. The change that Japan’s rail system has undergone, it deserves to be applauded,’ said Modi during an election speech in the national capital.

‘End of the day, the change there occurred because Japan introduced the concept of bullet trains and got the country elevated. China followed that concept.

In India, we have such a long rail network, but don’t think of its modernisation,’ said Modi, who has made a number of visits to both these countries to study their infrastructure development.

If this was not a major surprise for the people, Modi also promised what he called a diamond quadrilateral rail network, on the lines of a similar project for roads, with high-speed trains inter-connecting all the four metros and, with it, other key cities.

His idea: A person in any part of India should be able to reach any destination in no more than 24 hours using the country’s road and rail infrastructure.

Today, for the record, the longest train service in India is Vivek Express that covers a distane of 4,272 km between Kanyakumari in India’s south to Dibrugarh in the northeast, taking as many as 82 hours -- that is, more than three days, not counting the delays.

All this was the result of a major constraint: lack of enabling policy measures for Indian Railways to attract capital. By Railway Minister D.V. Sadananda Gowda’s latest estimate, shared in his maiden rail budget last month, the railroad network in India needs $38 billion in 10 years for modernisation and upgrade.

Now cut further to 6 August. Modi, who knows the Indian Railways rather well, having travelled extensively on its vast network during his days as a volunteer of the Hindu nationalist Rashtriya Swayamsevak Sangh (RSS), of which he was a preacher, made the first real move towards this direction.

A cabinet meeting he chaired Wednesday evening allowed 100 percent foreign equity in areas such as high-speed train systems, suburban railroad networks and dedicated freight projects to be implemented in public-private partnership mode. It was a move that had to wait close to 25 years since the current phase of economic reforms was initiated in July 1991.

All these projects mentioned above involve big-ticket investments. Technology, coaches and the engines for high-speed trains can be bought. The infrastructure also can be created. But the money will not come in till such time an enabling policy environment is attractive for investors – domestic or foreign. The option of foreign equity weighed heavily in favour. But thus far, India’s experiment with public-private projects in railways hasn’t been quite encouraging. But that has to change, given the ambitious projects that need private and overseas capital in large doses. IANS
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