Express prioritiesIndian Railways has rolled out the National Rail Plan to create a future-ready system by 2030Railways intends to expand operational capacity and rollout commercial policy initiativesEconomic corridors for energy, minerals and cement are to be implemented during Amrit KaalEnhancing revenues while also providing passenger subsidies remains a key challengePrivate-sector participation is mandatory to create a rail transporter of global standardsAs symbols of economic progress go, an enduring image across cultures has been that of trains. Viksit Bharat, the government’s vision to transform India into a developed nation by 2047 – the centenary year of our Independence – has a lot riding on trains, too. Steady economic growth, achievement of sustainable development goals, continuous improvement in ease of doing business metrics and better infrastructure are some of the imperatives to realise the vision. A big part of the ambitious agenda is the modernisation of the Indian Railways to ensure passenger safety and comfort and reduce travel times.Indian Railways aims to augment capacity under the National Rail Plan (NRP) 2030 and the Vande Bharat train project. The NRP is about creating a future-ready railway system by enhancing operational capacities and commercial policy initiatives by 2030. It envisages increasing modal share of rail in transport from 27 per cent in fiscal 2019 to 45 per cent by fiscal 2051. The Vande Bharat project encompasses creating capacity ahead of demand till 2050. This includes significant upgrades to the network (permanent way), rolling stock (coaches and wagons), and passenger amenities and safety. Network expansion is not only limited to providing connectivity to remote areas but also doubling single lines, quadrupling double lines and developing niche corridors to cater to specialised traffic.Per industry reports, approximately 14,985 km of tracks were added between 2004 and 2014, and approximately 31,180 km during the next decade.A sum of `2.52 trillion has been allocated to the railway sector for this fiscal, up 5 per cent from FY2024 and a 51 per cent jump over FY2023. Of this, nearly `400 billion is expected to be used in network expansion and enhancement. The increase in budgetary allocation is driven by the need for better infrastructure to achieve the targeted modal shift, retain passengers and enhance their experience. Augmentation of the Railways is also needed as it is losing out to competition in freight loading because of weak terminal infrastructure, high transit times and poor last-mile connectivity. In freight transport, coal is the biggest commodity (48 per cent) and the highest contributor to incremental volumes for the Railways. However, in the medium to long term, coal freight volume growth may be uncertain due to the country’s decarbonisation targets and go-green initiatives, because of which capacity augmentation by thermal power plants is limited and the continued role of coal as a major commodity can be challenged. This poses another challenge to increasing freight loading and modal share.Caution: men at work!With several modernisation projects underway, it’s a busy time in the 171-year-plus history of the world’s fourth-largest rail transporter. For instance, developing economic corridors not only eases the pressure on the existing system but also enhances the safety and operations of the overall rail network. In the early 2000s, Dedicated Freight Corridors (DFCs) were conceptualised to separate freight and passenger traffic on high-density routes to improve operational efficiency, reduce cost of operations and carry higher volumes of freight traffic. Since these were primarily along the eastern and western leg of the Golden Quadrilateral, some gaps were felt in providing pan-India freight connectivity.Therefore, three major economic corridors have been taken up as part of the Government’s Amrit Kaal strategy. These have been identified under the PM Gati Shakti scheme for enabling multi-modal connectivity for energy, minerals and cement to boost freight loading; port connectivity corridor; and high-traffic density corridor to decongest and enable faster passenger train movement. Together with the DFCs, these economic corridors are expected to increase throughput capacity for carrying more freight and passengers at reduced cost and accelerate GDP growth.Striking a balance between revenue generation and a fair degree of subsidisation remains the key challenge on the passenger carriage front. Although to enhance passenger earnings, various initiatives including dynamic pricing for Rajdhani and other premium trains, running special trains to handle summer or festival traffic, and graded discounts in classes and sections with low occupancy have been introduced, passenger revenues fall woefully short. Additionally, given the competitive pricing and travel time factor, the Railways faces stiff competition from the aviation sector, especially in the first and second AC segments. According to Union Minister of Railways Ashwini Vaishnaw, if a ticket costs Re 1 to the railways, passengers pay only 45 paise! This is substantially true for third AC and sleeper classes, where government subsidy continues to saddle the sector with losses, impacting the Railways’ operational ratio.To provide safe, reliable and sustainable fast rail services, deployment of technological excellence in terms of high-speed trains is the need of the hour. While the Mumbai-Ahmedabad high-speed rail corridor is under construction, fast-paced planning and development of newer corridors are required to compete with the aviation sector and retain the premium passenger segment.Given the complex nature of India’s rail network, making it a safe and reliable system has always posed an enormous challenge. The number of train accidents per million train kilomteres – a globally accepted safety index – decreased from 0.12 in fiscal 2012 to 0.06 in fiscal 2018. Of the total accidents, a substantial share is estimated to be due to derailments and human errors by railway staff responsible for operating, maintaining, and managing the trains and tracks and non-railway staff.To curb the number of accidents at level crossings, the elimination of level crossings by construction of road over or under bridges is in process. Introduction of equipment or systems such as high-intensity twin-beam headlights for locomotives, usage of disc brakes (30per cent reduction in emergency braking distance), the introduction of microprocessor-based speed recorders, improved crashworthiness of interior of coaches, Kavach anti-collision train system (developed by Research Designs & Standards Organization) and Block Proving Axle Counter (BPAC) for better railway traffic control have been undertaken as enhanced safety measures. To move towards zero accident tolerance, more investment in safety-related work, especially training of railway staff and deployment of modern systems, should continue.In fiscal 2023, the Indian Railways retained nearly Rs 32 billion for capital investment, considerably lower than the required quantum. Material budgetary allocations need to continue with private sector participation to fund network expansion, upgrade the conventional rolling stock, provide world-class amenities to passengers, and align with global standards. Since the late 2010s, the government has been exploring the involvement of private sector investments in railway infrastructure and services. The private sector has been involved in the operation and maintenance of trains. The driver and guard would be railway employees, but the private operator could appoint all other staff. The Lucknow-New Delhi Tejas Express was the first privately operated train managed by the Indian Railway Catering and Tourism Corporation (IRCTC), a subsidiary of the Indian Railways. In November 2021, the launch of the Bharat Gaurav scheme allowed private operators to operate theme-based trains along different circuits. The first train under this scheme, from Coimbatore North to Sainagar Shirdi, was flagged in June 2022. Such schemes not only help provide world-class passenger facilities but also give an impetus to employment generation and commercialisation.To utilise unused railway land and provide better passenger facilities, the Indian Railways plans to create world-class railway stations. The Railway Station Redevelopment Programme aims to redevelop 400 railway stations across India at Rs.1 trillion through the Public-Private Partnership (PPP) mode. The programme focuses on improving passenger amenities by leveraging real estate available with railways to fund the development.In the budget of 2022-23, the Central Government announced a plan to set up 100 Gati Shakti Cargo Terminals (GCTs) over the next three years. Of these, 77 GCTs have already been commissioned for Rs.54 billion. Riding on the success of the first phase, 200 additional GCTs are up for offer with an investment estimate of Rs.120-140 billion by corporate houses and freight operators. The GCT policy seeks to promote the development of new cargo terminals and improve existing cargo terminals to accelerate the growth of railway freight traffic.A long ride aheadAlthough the Indian Railways has made considerable progress and enhancement, it is far from replicating global standards. This can best be achieved through greater involvement of the private sector, greater freight carriage and the rollout of go-green initiatives. Although container train operations and multi-modal logistics parks (MMLPs) have attracted private sector involvement, full-scale participation is lacking. Unlike the roads & highways sector, the Railways have also not given this the necessary push. For instance, just a few years earlier the bid for privatising passenger train operations on select routes was called off after the expression of interest or qualification stage.To reduce logistics costs and enhance sustainability in cargo movement, the Railways’ modal share in freight needs to increase. However, this requires a multitude of initiatives. These include fare rationalisation, addressing connectivity issues, greater private sector participation, development of customised wagons and containers, promoting multi-modal connectivity, making railways ‘user-friendly’ for industries and new marketing plans. Initiatives such as infrastructure upgrade for 100 per cent electrification of broad-gauge network, improving energy efficiency of locomotives and trains, and harnessing solar power at railway stations have been undertaken. Adoption of the Renewable Energy Service Model (RESCO) model can be considered pan-India. Under this framework, both capital and operating expenditure are borne by the RESCO developer while the Railways can procure renewable energy at competitive rates through a long-term contract. About the author:Jagannarayan Padmanabhan is Senior Director & Global Head of Transport, Mobility and Logistics, Consulting at CRISIL Market Intelligence & Analytics.