Redirecting the Future of Indian Railways

This editorial is inspired by the article “Roadblocks to Indian Railways’ ‘Mission 3,000 MT” published in Economics and Political Weekly on September 14, 2024. The piece examines the marked decline in Indian Railways’ share of freight transport and its implications for India’s net-zero goals.

It underscores the necessity for strategic reforms and capacity improvements to meet the National Rail Plan’s freight objectives by 2030-31.

OVERVIEW: Indian Railways, which operates the world’s fourth-largest rail network, has been grappling with significant challenges in preserving its leadership in India’s transportation sector. Despite expanding route kilometers and track length since 1950, its share of freight transport has plummeted from 85% in 1951 to under 30% in 2022. This sharp decline threatens India’s net-zero goals and efforts to decarbonize the transport sector.

The National Rail Plan seeks to reverse this trend by aiming for a 45% rail share in freight transport by 2030-31, with a target of handling 3,600 million tonnes of freight.

However, performance metrics for the railways show worrying trends. Growth rates for both passenger and freight movement have slowed, especially during the Twelfth Five-Year Plan period (2012-13 to 2016-17), suggesting a disconnect between GDP growth and traffic performance. To meet its ambitious targets, Indian Railways must overhaul its business strategies, diversify its revenue streams, and address issues related to capacity and service quality.

What is the Significance of Railways for India?

• Economic Backbone: Indian Railways is essential to India’s economic growth, serving as a vital component of the supply chain.
  • In the fiscal year 2022-23, it transported 1,512 million tonnes of freight, significantly supporting both industrial and agricultural development.
  • The creation of Dedicated Freight Corridors (DFCs) aims to reduce logistics costs by utilizing higher axle load trains.

Key to Achieving India’s Climate Goals: As India works towards its Nationally Determined Contribution (NDC) target of reducing GDP emission intensity by 45% from 2005 levels by 2030, railways play a crucial role in promoting sustainable transportation.

• Rail transport is notably more energy-efficient compared to road transport, with rail freight producing less than one-fifth of the greenhouse gas emissions per ton-kilometer.
• Transitioning freight transport from road to rail could make a substantial impact on meeting India’s climate objectives. 
• Affordable Mobility: Indian Railways acts as a significant social equalizer by offering cost-effective transportation to millions of Indians.
  • Revenue from passenger services increased by 73% between April and January 2023.
  • The tiered pricing system of the railways ensures that transportation is accessible to people across different economic levels.

Strengthening National Security and Integration: Railways are essential for national security and cohesion.

• They are crucial for the swift deployment of troops and equipment to border regions. Projects like the Bilaspur-Manali-Leh rail line highlight their strategic role by providing year-round connectivity to Ladakh.
• Railways also promote national integration by enabling cultural exchange and tourism.
  • The recently introduced Bharat Gaurav trains, which highlight India’s cultural heritage, exemplify how railways enhance national identity and boost tourism.
• Urban Lifeline: Railway-based urban transport systems are transforming India’s cities. In the past decade, 700 km of new metro lines have been added, increasing the total operational length to 945 km and expanding metro services to 21 cities nationwide.
  • These systems are vital for sustainable urban growth, alleviating traffic congestion and reducing air pollution.
  • For example, the Delhi Metro, which serves approximately 6.5 million passengers daily, has significantly cut annual CO2 emissions.
  • Integrating metro networks with other transportation modes is fostering more efficient urban mobility solutions.

Bridging the Urban-Rural Divide: Railways play a crucial role in promoting balanced regional development. Initiatives like the Northeast Frontier Railway’s expansion have unlocked economic opportunities in remote areas.

• The 111 km Jiribam-Imphal railway line, when completed, will significantly enhance connectivity and boost Manipur’s economy.
• These projects not only improve transportation links but also stimulate growth in education, healthcare, and local industries, thereby helping to bridge the urban-rural gap.

What are the Major Issues Facing Indian Railways?

Declining Share of Freight Transport: Indian Railways has seen a dramatic drop in its freight transport share, from 85% in 1951 to under 30% in 2022.

• • This decline presents significant challenges for India’s environmental objectives and the efficiency of the transport sector.
  • The National Rail Plan aims to boost the rail freight share to 45% by 2030-31, yet current forecasts fall short of this goal.
    • For example, even with an optimistic 7% CAGR, annual freight loading is expected to reach only 2,598 million tonnes by 2030-31, well below the 3,600 million tonnes target.
  • This drop highlights broader issues of competitiveness and the need for adaptation to evolving economic and transportation demands.

Financial Performance and Operating Ratio: Indian Railways’ financial health has been on a downward trend, as indicated by its rising operating ratio (OR).

• The OR has increased from 78.7% in 2006-07 to over 100% in 2021-22.
  • This signifies that Indian Railways is spending more than it earns, raising significant concerns about its financial viability.
• The Comptroller and Auditor General of India has also noted that the reported OR may not fully capture the financial situation.
  • For example, in 2019-20, including actual pension expenditures would have resulted in an OR of 114.35%, compared to the reported 98.36%, highlighting a more severe financial strain than officially reported.

Over-Reliance on Coal for Revenue: Indian Railways relies heavily on coal transport for its freight revenue, with coal accounting for 47% of freight earnings in 2021-22.

• This dependence presents a significant risk as India transitions to renewable energy sources.
• A recent directive from the Ministry of Power (January 2023) to adopt the “Rail-Ship-Rail” mode for coal transport in certain states could further diminish revenue from coal.
  • The lack of diversification in freight revenue sources makes Indian Railways susceptible to changes in energy policies and market demands, which could affect its long-term financial stability.

Capacity Constraints and Infrastructure Limitations: Although Indian Railways has expanded its track length from 51,315 km in 1950-51 to 102,831 km in 2021-22, it continues to face significant capacity issues.

• This hampers its ability to meet increasing transportation demands and compete effectively with other modes of transport.
• The pace of network expansion has not kept up with the overall growth in freight demand across the economy.
• This has led to a decrease in the railways’ share of freight movement, especially for bulk commodities.
• For instance, despite the inelastic nature of prices, the railways’ share in cement transport dropped from 2005-06 to 2019-20, suggesting that issues like capacity and service quality are affecting shippers’ choices more than pricing alone.

Technological Adaptation Lag: Indian Railways struggles with adopting new technologies and modernizing its operations to keep up with evolving market demands.

• Container services and other goods contribute just 12% to freight loading and have seen little growth, highlighting a delay in adapting to changing freight patterns, especially in high-value sectors like automobiles.
• The Kavach automated train protection system, designed to prevent collisions on the same track, remains largely underutilized.
  • Despite being introduced four years ago, as of early August 2024, Kavach has only been implemented on 1,456 km of the South Central Railway, which is merely 3% of the national rail network.

Safety Concerns and Derailments: Indian Railways continues to face significant safety challenges, with derailments being a major issue.

• On average, there were 44 consequential train accidents annually over the five-year period ending in 2022-23.
• High-profile incidents, such as the Balasore triple train crash in June 2023 and the Sabarmati Express derailment in August 2024, have underscored ongoing safety vulnerabilities.
• Contributing factors include outdated track infrastructure, human error, and signal failures.
• The railway’s goal of achieving “zero accidents” remains out of reach, highlighting the need for ongoing efforts in track renewal, modernizing signaling systems, and improving safety protocols.

Slow Progress in High-Speed Rail Projects: India’s high-speed rail initiatives, notably the Mumbai-Ahmedabad bullet train corridor, have encountered substantial delays and cost overruns.

• Initially set to be operational by 2023, the completion date has now been extended to 2028 due to land acquisition challenges.
• This sluggish progress in developing high-speed rail not only places India behind international competitors but also hampers the modernization of rail transport, impacting long-term competitiveness and economic growth.

Human Resource Management and Skill Gaps: As one of the world’s largest employers, Indian Railways is grappling with challenges in human resource management and skill development.

• The modernization of railway operations, such as the introduction of semi-high-speed trains like Vande Bharat, has highlighted a growing skill gap, requiring specialized maintenance and operational expertise.
• According to the Union Railway Minister in the Rajya Sabha, over 250,000 positions were vacant in Indian Railways as of July 2023.
• Effectively filling these vacancies while equipping the workforce with the necessary skills for modern railway operations remains a major challenge.

Key Committees on Indian Railways Reforms

• Vinod Rai Committee (2015):
  • Establish an autonomous Railway Safety Authority with statutory powers.
  • Create a Railway Accident Investigation Board to conduct impartial inquiries.
  • Set up a separate Railway Infrastructure Company to manage railway assets.
  • Implement a performance-based incentive scheme for railway employees.
• Rakesh Mohan Committee (2010):
  • Overhaul the accounting system to align with Indian GAAP.
  • Expand into sectors such as FMCG, IT, containerized cargo, and automobiles.
  • Focus on long-distance transport, speed improvements, and high-speed rail corridors.
  • Improve connectivity to industrial hubs and major ports.
  • Develop logistics parks at key locations.

Measures to Revitalize Indian Railways

• Implement Advanced Traffic Management Systems: Indian Railways should expedite the rollout of advanced traffic management systems, such as Kavach, across its network.
  • This automated train protection system can significantly enhance safety and operational efficiency.
  • Expanding Kavach from its current coverage of 1,456 km to at least 20% of the network within the next two years could substantially reduce collision risks.
  • Prioritize installation on high-traffic and accident-prone corridors.
  • Combine Kavach with AI-driven predictive maintenance tools to proactively detect potential track or signal failures, enhancing safety and reducing downtime.
• Diversify Freight Portfolio and Enhance Logistics Services: To mitigate reliance on coal transport and adapt to market changes, Indian Railways should actively diversify its freight offerings.
  • Develop specialized services for high-value, time-sensitive goods such as pharmaceuticals, electronics, and perishables.
  • Establish a network of temperature-controlled containers and dedicated express freight corridors to attract customers from these sectors.
  • Partner with e-commerce leaders to create rail-based logistics solutions tailored for the growing online retail market.
• Accelerate High-Speed and Semi-High-Speed Rail Projects: While addressing delays in the Mumbai-Ahmedabad bullet train project, focus on expanding semi-high-speed trains like Vande Bharat.
  • Upgrade existing tracks and signaling systems to support higher speeds.
  • Modernize the Golden Quadrilateral network to consistently achieve speeds of 160-200 km/h, significantly reducing travel times and making rail travel more competitive with air travel for intercity routes.
• Develop Sustainable and Energy-Efficient Operations: Indian Railways should fast-track its transition to renewable energy and energy-efficient technologies.
  • Increase track electrification to 100% and expand solar and wind power generation along railway lines.
  • Install solar panels on station rooftops and unused railway land to meet a substantial portion of the railways’ energy needs.
• Modernize Freight Terminals and Develop Multimodal Logistics Parks: Focus on modernizing existing freight terminals and developing new multimodal logistics parks to enhance efficiency and attract more freight traffic.
  • Automate loading and unloading processes, implement advanced inventory management systems, and create seamless intermodal connections.
  • Equip these parks with state-of-the-art container handling equipment, real-time tracking systems, and integrated customs clearance facilities to provide comprehensive logistics solutions.
• Enhance Station Redevelopment and Commercial Utilization: Accelerate station redevelopment projects to transform major railway stations into modern transit hubs and commercial centers.
  • Beyond cosmetic upgrades, include smart city features, mixed-use developments, and improved passenger amenities.
  • Use the redevelopment of Rani Kamlapati Railway Station in Bhopal, with its modern design and airport-like facilities, as a benchmark for future projects.

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Conclusion

Revitalizing Indian Railways is essential for bolstering its contribution to India’s economy and sustainability. Addressing challenges such as the decreasing freight share and financial sustainability through modernization and innovative approaches can boost efficiency and competitiveness. By diversifying services and redeveloping stations, Indian Railways can play a pivotal role in national integration and sustainable development, positioning itself as a central force in India’s future growth.

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