Buoyed by a steady increase in revenues at Indian Railways and a cash surplus of Rs250bn, India's Railway Minister Lalu Prasad shared his euphoria with fellow parliamentarians when presenting the railway's budget for 2008-09 on February 26. 'On the benchmark of net surplus before dividend, this makes us better than most of the Fortune 500 companies', he announced.
In the last four years, IR's freight volumes have increased by 233 million tonnes. The total for the year to March 31 is expected to reach 790 million tonnes, around 62 million tonnes ahead of 2006-07. Freight tonne-km are forecast to reach 513 billion, generating total freight revenues around Rs60bn more than last year.
Prasad expects the number of passenger journeys to increase from 6 219 million in 2006-07 to 6 688 million. With gross receipts totalling Rs726·5bn and working expenses of Rs554·2bn, IR is projected to achieve a cash surplus of Rs250·65bn and net revenue of Rs184·2bn in 2007-08, equivalent to an operating ratio of 76·3%.
Prasad plans to publish within six months a new Railway Vision 2025, setting out his long-term development strategy. With IR's traffic expected to grow to 1 100 million tonnes and 8 400 million passengers a year by the end of the current plan period in 2012, he said the main focus for investment must be capacity expansion. This will include modernisation and technical upgrading to improve efficiency and reduce the unit cost of transport. IR has been instructed to set up a multi-departmental group to promote innovation, as well as a strategic business unit to focus on coal, cement, steel and container traffic.
Investing in capacity
The 2008-09 budget provides Rs115bn for investment in rolling stock: Rs32bn for 250 diesel and 220 electric locomotives, Rs23bn for coaches, and Rs47bn for a record 20 000 wagons, as well as Rs4·5bn for related plant and machinery.
IR has decided to concentrate on stainless-steel wagon types with a 22·9 tonne axleload, notably the BCN van which has a lower tare weight. It also has a higher and wider body profile, but is shorter, allowing IR to accommodate 58-vehicle trains into its standard 686 m loops compared to 40 wagons of the current design. This will raise the payload per train from 2 300 to 4 100 tonnes. This year IR expects to rebuild 5 000 open wagons with stainless-steel bodies, reducing their tare weight by 2 tonnes. Existing wagons for steel and petroleum products have a 20·3 tonne maximum axleload, but RDSO has developed the BRN design for steel products with a 25 tonne axleload. Discussions are being held with international suppliers for development of a BTPN tank wagon that makes full use of the 22·9 tonne axleload.
Significantly, Prasad announced a new policy for introducing new wagons, simplifying the process for certification and acceptance, whilst protecting the intellectual property rights of suppliers. He believes this will encourage global manufacturers to import technology and promote more modern designs. This will be coupled with a new wagon leasing and operator registration policy. Leasing firms will be encouraged to invest in special purpose, high-capacity and container wagons, and operators or shippers who buy or lease their own wagons will qualify for discounted freight rates.
With demand for metro and suburban coaches rising, as well as export orders, IR plans to establish another coach factory in Kerala, where the state government has made available 400 ha of land. Demand for wagon maintenance and rebuilding is also on the increase, so a new wagon works is envisaged at a cost of Rs400m. This would be located at Garkha in Bihar state - Prasad's constituency. IR is also proposing to modernise the locomotive workshops at Lilluah in West Bengal, Perambur in Chennai and Ajmer in Rajasthan at a cost of Rs2bn. Another Rs820m has been allocated for modernisation at Jamalpur, one of IR's largest integrated workshops.
With shippers increasingly demanding point-to-point services at competitive prices, Prasad said IR would encourage public-private partnerships to provide value-added services such as handling facilities, warehousing and multi-modal logistics parks. He announced a new policy to encourage the development of bulk handling terminals for cement, flyash, grain and fertilisers, under which commodity producers or their agents would invest in new terminals and wagons. Similar schemes are envisaged to promote development of terminals for non-bulk finished goods, which would also be permitted to accept third-party traffic.
Vision for IT
To improve IR's operations management, Prasad announced a Vision for IT to be implemented over the next five years. This will cover tailored applications for three core areas: freight, passenger and integration. GIS, GPS and RFID will be introduced progressively, he explained.
An integrated security plan has been drawn up, including the installation of CCTV at important stations, plus the use of metal detectors, baggage screening, and explosive detection systems. Anti-collision devices have already been installed on the North East Frontier Railway. Following successful trials, IR will extend this to the Southern, South Central and South Western railways over the next two years.
Ultrasonic rail testing cars, bridge testing equipment and track monitoring cars are to be acquired over the next five years at a cost of Rs1·4bn, and trials will be conducted with an on-train smoke and fire detection system.
With IR investment expected to total Rs2 500bn, over the next five years, Prasad believes that PPP projects could provide up to Rs1 000bn. PPP concessions covering investment of about Rs250bn are likely to be awarded in 2008-09 alone, he said.
Through global competitive bidding, concessions are to be awarded for station redevelopment at New Delhi, Mumbai CST, Patna and Secunderabad. These will entail an investment of nearly Rs150bn. And as announced last year, PPP partners are to be selected to set up new factories for diesel locomotives, electric locomotives, and coaches at an estimated cost of Rs40bn. Prasad said other PPP projects covering container trains, container depots and multi-modal logistics parks would attract investment of the order of Rs20bn. The Rail Land Development Authority is expected to raise Rs40bn during 2008-09 through commercial use of surplus land.
With the present United Progressive Alliance coalition government now in the penultimate year of its five-year term, Prasad rattled off a slew of initiatives for passenger services. Over the next two years, the number of Unreserved Ticketing System counters will increase from 3 000 to 15 000, and automatic ticket vending machines from 250 to 6 000. The number of passengers travelling on e-tickets is expected to rise from 100 000 to 300 000.
Reflecting India's exponential growth in mobile phone use, with the total expected to reach 500 million by 2010, IR is exploring the option of issuing reserved and unreserved tickets by mobile phones. Trials have started with the use of multi-purpose smart cards for ordinary tickets, monthly season and platform tickets on Central Railway's suburban services in Mumbai. This has also been integrated with tickets for local bus services. Prasad reported that the railway enquiry call centre has been 'a big hit'. The computerised enquiry service is now available across the entire country on a single number, at local call rates.
Among other IT applications, IR will install digital information displays on long-distance overnight mail and express trains, providing details of the next station, remaining distance and likely time of arrival. LED departure boards and platform indicators are to be installed at around 100 major stations by March 2009.
According to the minister, IR's flagship Rajdhani and Shatabdi expresses will undergo a substantial revamp. All Rajdhani trains will be operated with LHB-designed coaches by March 2010 and all Shatabdis by March 2011. Similar stainless-steel coaches with ICF bogies will also be introduced on Mail and Express trains, raising capacity by up to 16% and providing greater comfort. Series production of these vehicles at IR's coach factories is due to commence in 2008-09, and Prasad said that from 2009-10 onwards only stainless-steel coaches will be manufactured. The new coaches will have ergonomically-designed modular toilets, and IR has been tasked with addressing the thorny problem of discharge. Retention toilets are to be fitted to all 36 000 coaches by 2012 at a cost of Rs40bn.
However, Prasad once again failed to address the ratio between passenger and freight revenues, which led IR to record an annual loss of more than Rs70bn on its passenger services last year. In 2006-07, IR handled 695 billion passenger-km and 481 billion net tonne-km. Passenger services accounted for 59% of traffic, but freight generated 71% of the Rs589·4bn revenue. Using World Bank figures, IR's ratio of average passenger tariff to average freight tariff is 0·3, compared to 1·19 in China, 0·97 in Russia, 1·56 in France, 3·07 in Germany and no less than 11·06 in the USA.
Adding capacity for freight
For its 'bread and butter' freight business, IR needs to increase capacity, particularly on its busiest routes linking Delhi, Mumbai, Chennai and Kolkata, the main coal and iron ore routes, and the lines to and from the major ports. Most of these corridors are already saturated.
The latest budget envisages investment of about Rs750bn over the next seven years to augment capacity on these routes. The minister identified 124 specific projects, including double-tracking works, construction of third or fourth lines, bypasses, flyovers, more passing stations, intermediate block posts, automatic signalling and yard remodelling. Work will also start on the construction of the dedicated eastern and western freight corridors.
Expansion of automatic signalling is already underway, for example on the coal corridor between Kanpur and Mughalsarai, and on the Ghaziabad - Kanpur line which is being funded with the assistance of KfW. Automatic signalling has also been approved for the Howrah - Khana, Delhi - Palwal, and Vadodara - Surat - Valsad - Dahanu Road corridors.
Reflecting the importance of several industry sectors to IR's freight traffic, Prasad outlined a framework for investment. Coal accounts for 40% of IR freight output and revenues, so the minister has directed that new dedicated routes for coal movement should be fit for 25 tonne axleloads.
IR receives about 25% of its total freight from gateway ports, and with foreign trade anticipated to increase from 650 to 1 100 million tonnes by 2011-12, port rail connectivity projects have also been assigned a high priority. Gauge conversion has been completed on the Gandhidham - Palanpur line serving Mundra and Kandla ports, and on the line from Hassan to Mangalore port. Work is in progress on the Bhildi - Samdari and Rewari - Ringus -Phulera lines. Conversion of the Kurla - Wadala line has now been approved, which will further improve rail links to the port of Mumbai.
Special Purpose Vehicles have been formed to harness private sector participation in a new line from Haridaspur to Paradip, improved rail links to the port of Krishnapatnam, and gauge conversion of the Bharuch - Dahej route. SPVs are also proposed for the new Surat - Hazira and Pen - Revas lines which will also improve port connectivity. On the east coast, rail links to the ports of Dhamra and Kirtaniya have been proposed as private initiatives. Construction has started of a new line from Idapalli to serve an inland container transshipment terminal at Valarpadam near Cochin. A new line has been proposed from Attipattu to Puttur to handle growing traffic through Ennore port near Chennai along with another to serve the port of Dighi.
With India's steel production expected to double to 110 million tonnes by 2012, IR anticipates that its steel-related traffic will grow from 120 million tonnes today to 200 million tonnes in 2011-12. To meet this demand, new dedicated iron ore routes are to be constructed, and existing lines upgraded for 25 tonne or even 30 tonne axleloads.
Approval has been granted for construction of a new line from Angul to Sukinda, laying of a third track between Manoharpur and Goelkera, and doubling of the Padapahar - Banspani, Barbil - Badajamda and Dumitra - Champajharan lines. Surveys are also underway for a third track between Goelkera and Adityapur and for the doubling of the Champajharan - Bimalgarh and Jhakhpura - Banspani lines. An important project now under discussion is double-tracking of the Kirandul - Kottavalasa iron ore line.
Some of these projects, along with doubling of the Hospet - Vasco line, will be undertaken through Rail Vikas Nigam Ltd, with the involvement of steel and iron ore producers.
India's annual production of cement is forecast to increase from 170 to 280 million tonnes over the next four years, and IR expects its traffic to double from 100 to 200 million tonnes in 2011-12. Cement production is clustered in 10 regions, and capacity enhancement measures are envisaged to serve them. Work is in progress on three new lines: Nandyal - Yerraguntla, Jaggayyapet - Mallacheruvu and Vishnupuram - Janpahad. A new route from Bhanupali to Bilaspur and Beri was announced in the budget. Double-tracking of the Daund - Gulbarga line and electrification from Pune to Guntakal will be stepped up to meet the demand of the ?cement industry in the Wadi region. More than 50 major terminals handling cement are being upgraded to increase capacity, including major facilities at Mumbai, Pune, Chandigarh and Ghaziabad.
Container traffic is growing rapidly, with 15 operators given licences to operate container trains in the last three years. There are now 44 independetly-owned trainsets in operation, as well as 146 owned by Container Corp. Of the 60 rail-served container terminals, three have been built by private sector licencees. Over the next few years 48 more depots are to be developed - eight by Container Corp and 40 by private operators.
'We are taking Indian Railways to unprecedented hights ... as a guiding beacon to write a story of success. IR has received acclaim the world over as a unique mega enterprise'
Lalu Prasad Yadav
Railway Minister, India
- CAPTION: The first of 157 dual-system EMUs being built by ICF and Siemens for the modernisation of the Mumbai suburban network entered service on the Western Railway line from Churchgate to Virar at the end of 2007.