We’re all aboard on Railway Investment

Context: Recently, Indian Railways has proposed to spend ?2??lakh crore a year till 2023-24, to upgrade infrastructure.

Issues with Indian Railways:

• Passenger operations consume two-third of its resources but yield barely a third of revenues.

• Commuters’ season ticket concessions, for travel up to 150 km, constituted nearly a quarter of all non-suburban passenger traffic in 2016-17; yet yielded just over 1% of corresponding revenue.

• The heavy cross-subsidization of passenger services: especially for suburban travel, simply means that IR is mostly out-priced and outcompeted in the freight market.
• Misplaced Priorities: Running railways merely as a departmental undertaking, with an undefined public service obligation results in misplaced priorities.
• Scarce resources: can hardly be allocated thinly across myriad projects, given the capacity crunch along arterial routes and overstretched terminals.

Way Ahead:

• Form joint ventures for suburban services with major municipalities and states, to better provide for short-haul travel.
• Encourage efficient tariffs and dependable services to boost offtake: instead of irrational freight rates and questionable fares.
• Railways need to shed bureaucratic rigidities, and have no more than nine zones instead of 16, as suggested by the Bibek Debroy committee.
• Must step-up auto, white goods and FMCG freight.
• Improved coal beneficiation at pitheads can significantly rev up haulage capacity and revenue.

Conclusion: It would be entirely sustainable if Indian Railways finds the courage to competitively price its services, innovate and run operations in a business-like manner.