With India's economy growing at more than 8% per year, demand for both freight and passenger transport is rising rapidly. Outgoing IR Chairman J P Batra tells Chris Jackson that the biggest challenge is to absorb growth on the existing network and add capacity as quickly as possible

CAPACITY, CAPACITY, CAPACITY is the undisputed priority for Indian Railways during the 11th five-year plan which started on April 1 this year. IR is already the world's second busiest railway after China in terms of passenger-km and third-busiest overall, yet its latest projections envisage a 35% increase in passenger traffic and no less than 45% in freight by 2011-12.

'Our challenge is to absorb this growth on the existing infrastructure and add capacity in as short a time as possible', explains J P Batra, who steps down as IR Chairman on July 31. During his last few months in office, he has been 'working on medium- to long-term plans to ensure better services for our customers.'

Economic liberalisation and globalisation of trade have seen the Indian economy growing at more than 8% per annum, which Batra says is already having a significant impact on IR traffic. 'Before 2002-03, average freight growth was 4% per year, and passengers were growing at 2·5% or so. But in the past two or three years we have seen growth averaging 9% to 10% for freight and 6% to 7% for passenger traffic' - which he says is an average of 5% on the suburban networks and 9% on long-distance routes. At the same time that the market is growing rapidly, Batra is also looking to grow rail's freight market share from its current level of around 30%.

Indian Railways has been described as the 'lifeblood of the nation', operating approximately 11 000 passenger trains a day, and around 5 000 freight trains a week. In the 2006-07 financial year, IR handled 6·2 billion passenger-journeys and moved 726 million tonnes of freight.

Financial success

Batra proudly reports that IR achieved an operating ratio of 78·7% in 2006-07, which he says is 'the best result for 20 years', and comparable to that achieved by the North American Class I railroads. 'And IR has achieved it with a high proportion of passenger traffic', he adds. 'In the present mix of fast and slow passenger trains freight has the lowest priority. Passenger trains get priority, but actually produce less revenue. A lot depends on the teamwork of the staff to keep everything moving.'

To put this in context, Batra notes that 'at present IR gets 67% of its earnings from freight traffic and 33% from passengers.' As the railway is still an integral part of central government, it therefore has 'social responsibilities to discharge', which means using freight revenues to cross-subsidise unremunerative local passenger services.

A major contributor to the improved profitability has been a steady increase in freight revenues over the past few years. Although the official rates have not altered, industry sources suggest that changes to category bandings, long-distance rate tapers and related discounts have seen the actual freight charges paid by customers increasing by as much as 60% in some cases since 2002-03.

Although the higher rates may be suppressing some demand, in many cases there is no viable alternative. Sources suggest that IR is only able to handle around two-thirds of the freight traffic on offer, and this is likely to be acting as a brake on national economic development.

Despite this opportunity to price up in a constrained market, Batra insists that 'we must ensure freight rates remain competitive. We have to keep a balance between what the traffic can bear and what is reasonable to encourage growth in freight traffic. There is a lot of competition from road, which keeps rail in check as far as rates are concerned.'

He notes that the government is currently investing heavily in improvements to the trunk road network which will permit the introduction of heavier lorries. 'Our challenge here will be to reduce our net cost per unit of transport', he emphasises. 'The railway will have to be much more market savvy and efficient.'

Investment in capacity

Around 60% of all passenger and freight traffic is moving over the four Golden Quadrilateral routes linking Mumbai, Delhi, Kolkata and Chennai plus their two diagonals, which are now 'super-saturated'. Batra says 'we need to invest heavily in infrastructure to carry more traffic.'

By the end of the 11th plan in 2011-12, IR is projecting traffic levels of 8·4 billion passengers and 1 100 million tonnes of freight per year. 'But the need is even greater', emphasises Batra. 'The transport market is currently growing at 10% a year and is expected to grow faster in the future. Hence our focus on capacity enhancement for the core routes.'

The investment plans for the five-year period outlined by Railways Minister Lalu Prasad in February (RG 4.07 p198) focus on buying technically-advanced rolling stock and additional infrastructure. Batra says IR is working on a mix of short, medium and long-term solutions.

'In the short term, we need to find track and wagons fit for more productive use - this will increase carrying capacity by around 15%. We have already moved from the classic 20·3 tonne axleload to 22·9 tonnes on specified routes, and now we are looking at 25 tonnes on some routes. We will start soon with the freight corridors and dedicated iron-ore circuits, strengthening the bridges, track and wagons. Two routes have been identified as pilot projects, and we will choose another four or five in the next year. This first phase is very much a trial, but if it works we will standardise on 25 tonnes later.'

Batra says that 'operating procedures will be modified to get better output' - and there certainly seem to be some 'quick wins' available if IR can move away from its traditional rules which seem to be driven more by political than commercial considerations. At present profitable and increasingly time-sensitive freight trains are spending long periods sitting around while all-stations local passenger services take priority, eating up precious capacity.

Another strategy will focus on differential freight pricing, which Batra believes will help to divert more traffic from road to rail. For example, 'we will offer deep discounts for traffic moving in the empty flow direction and at slack periods', attracting more backloads to improve wagon productivity.

'In the medium term', he continues, 'we will increase productivity by investing in high-power locomotives to increase train speeds. Investment in the infrastructure will focus on removing bottlenecks - for example improving terminal facilities. We will increase the pace of electrification to permit seamless movements, and make more use of bypass lines and flyovers to keep traffic clear of key junctions and pinch points.

'For the longer term, we are now working on dedicated freight corridors with 30 tonne axleloads, which will permit the full segregation of freight and passenger services and give freight movements the priority that is required.' The first phase has already been approved, with detailed design work underway for two lines linking Delhi with Mumbai and the Punjab with Kolkata (RG 10.06 p686).

Batra believes that the western route will be 'essential to cope with a projected 25% per annum growth in container traffic. We are developing this route for double-stack, having already conducted successful trials between Gujurat and Rajasthan. The eastern corridor will primarily be moving coal, iron, steel and other bulk commodities.

'For the future we are developing plans for four more corridors, which would bring the total route length of dedicated freight lines to 11 000 km.' The programme would also require the simultaneous upgrading of around 15 000 km of feeder routes to link the DFCs with loading and unloading terminals on the existing network.

Traction and rolling stock

Despite the anticipated productivity improvements, IR expects to need more locomotives and rolling stock to handle the growing traffic.

IR has been upgrading its existing plants to maximise their output, with the two carriage factories in Chennai and Kapurthala now turning out a total of 3 000 coaches a year. Electric loco specialist Chitteranjan Loco Works and the Diesel Loco Works at Varanasi are each building 200 locos a year, whilst the Wheel & Axle plant at Bangalore is expected to produce 200 000 wheels in the 2007-08 financial year.

'We have decided to set up another electric locomotive plant and a second diesel loco plant, each able to produce 150 units/year, a third passenger coach factory with a capacity of 1 200 vehicles a year and another wheel and axle plant turning out up to 100 000 wheels a year', says Batra. 'These are to be developed with private sector partners under a PPP initiative.'

Over the last 10 years IR has invested to improve its locomotive technology, with CLW now turning out high-power electric locos based on an ABB design, and DLW building derivatives of the EMD JT46CW. The PPP project is intended to harness the latest international advances in technology.

Batra says the four new production facilities would not only build new equipment for IR, but would also be able to compete in the export markets, 'making India a manufacturing hub for southern Asia and Africa'. In addition new maintenance facilities will be developed for IR's new-generation locos and rolling stock through another PPP initiative 'either with the same partners or with different companies'.

Private sector investment

All of this investment will require funding. Batra says IR gets 'some support from central government, which funds around 35% of our investment needs'. Another 60% comes from IR's own operating surplus, 'and there is some borrowing to fund up to 15% of our investment needs'.

During the 11th plan period, IR expects to invest around US$50bn, of which Batra says a third will come from central government. Another 30% to 35% will be generated internally, leaving up to 40% to come from PPP inititatives and borrowing. 'These are likely to include other major projects such as the DFCs and high speed passenger lines as well as the production units.' This reliance on private-sector funding 'will be a major shift in our strategy', he admits.

'We have already taken some steps in this direction', Batra continues, noting that some sections of new line now under construction have been put out to consortia incorporating both private firms and local government authorities.

IR is also harnessing private funding through the commercial exploitation of railway land, including a number of schemes to fund the development of 'world class' stations. Batra says IR is also encouraging the development of rail-served warehousing and logistics parks and the construction of hotels on railway land.

'All new activities being introduced will as far as possible be funded through PPP initiatives', he says. 'This reliance on PPP is bound to bring about a considerable change in the way the railway is managed.' A lot of non-core activities such as train catering and support services will be opened up to joint ventures, but key areas such as infrastructure development and operations will remain with IR, he believes.

Container operations first

IR's first venture into private operation of train services is now starting to take shape, following the government's decision to introduce competition into the container market. At present container traffic only represents around 4% of IR's total freight movement, but the business has been growing at 16% per year and is expected to increase even faster in the next few years.

Including IR's container subsidiary ConCor, '14 companies have licences to operate in this market'. Most are major shipping lines or freight forwarders, sometimes working in a joint venture. For example, Neptune Orient Lines and Hindustan Infrastructure Projects & Engineering launched their first service between New Delhi and Mumbai on May 31, marketed under the APL IndiaLinx branding. NOL holds a Category 1 licence allowing it to run services throughout India.

The companies will buy and maintain their own wagons, and build their own terminals or negotiate access to common handling facilities managed by ConCor. They will market and retail the services, but the actual train operations will remain firmly under IR control.

Batra explains that 'IR will provide the locos and crews, and move the trains on a non-discriminatory first come first served basis. As part of government, we have to decide what stays with the state and what can be outsourced - and it has been agreed that railway operations should remain under government control.' He admits that there are a few private lines - such as those serving ports and sidings - where the owners can run their own locos, but these are 'a very small part of the system'.

New line projects

The first two dedicated freight corridors are also being developed in conjunction with the private sector. A single Special Purpose Vehicle has been formed to build both lines, and Batra says the process has started to select a board and Managing Director. 'As soon as the board is in place, we will launch construction', he continues.

'The SPV will be fully-owned by IR', he explains, 'because there will be extensive interaction with the existing network.' Although several new logistics centres are planned along the new lines, to start with almost all of the traffic will come from the feeder routes.

The SPV will be responsible for design, construction and maintenance of the freight corridors, together with operation of the infrastructure, which Batra says will be transferred to IR ownership after the initial concession period expires. He does not expect the SPV to own any rolling stock, but says that it will be responsible for the running of trains over the two new lines.

As well as the six freight corridors, IR is also starting to look at the potential for high speed passenger lines in the Golden Quadrilateral. 'Internal air traffic has been rising by 35% per year', says Batra, 'which indicates that there are now enough people with disposable income to support a premium passenger service'. He believes that high speed rail would score 'over medium distance routes of 500 to 1 000 km between city centres.'

Batra is confident that high speed passenger trains could be profitable. The average fare on the budget airlines is Rs4/km, which is the same as AC2 class on the premier Rajdhani Express services, and less than the Rs6/km typically charged by rickshaw drivers in major cities. 'We should be able to charge less than Rs4/km for our high speed trains, and still make a profit because of the high volumes', he predicts.

IR has identified four potential corridors for 300 to 350 km/h operation, and Lalu Prasad confirmed in February that feasibility studies will be launched this year. Likely priorities are Mumbai - Ahmedabad (500 km), Jaipur - Delhi - Chandigarh - Amritsar (850 km), Kolkata - Dhanbad - Patna (470 km), and Chennai - Bangalore - Coimbatore - Ernakulam (800 km).

However, Batra says it is unlikely that construction could begin in less than 10 years. He envisages that the project is most likely to be taken forward as a PPP inititative involving the states and central government plus other stakeholders. 'Our thought is that the high speed lines should have easy connections and a high degree of interoperability with the existing network', he says.

  • CAPTION: Freight contributes two-thirds of Indian Railways' revenue, but capacity is constrained by traditional operating practices which give priority to passenger trains on busy mixed-traffic routes. A WDM-2 diesel passes Hazrat Nizamuddin near Delhi with a short mixed freight train
  • CAPTION: The diesel maintenance depot at Tughlakabad is responsible for around 150 main line locos IR is planning to developing new maintenance facilities for its next generation of technically-advanced traction under some form of PPP partnership
  • CAPTION: Western Railway's suburban services operating from Mumbai's Churchgate terminus now handle around 3·1 million passengers a day, with a similar number using Central Railway services to and from CST. Around half of WR's 1 000 daily services have been lengthened from nine to 12-car EMUs further capacity expansion will come in the next two years with the completion of four-tracking from Borivali to Virar, construction of a fifth track to segregate inter-city services and conversion from 1·5 kV DC to 25 kV AC electrification
  • CAPTION: IR's Chitteranjan-built Class WAP-5 inter-city electric locos are based on 10 ABB-built asynchronous-motored prototypes delivered in 1995. The Co-Co WAP-7 was locally developed for Northern Railway passenger services from the similar ABB-designed WAG-9 freight locos

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