Private freight trains signal big reforms, turnaround in railways

Image: Representational/PTI

Freight, the main cash-cow of the Indian Railways, is about to shake off its monopolist mantle. Properly transformed, it can put the Railways back in the green all by itself. Not only that, but setting the economics of the Indian Railways right can become the biggest institutional  turn-around after the triumph of the  reformed indirect taxation system  with GST. The advent of private freight trains, it was announced, could later lead to private passenger trains as well. But, for now, the move is meant to be a modest force multiplier. Working in parallel with the policy to create dedicated freight corridors, and probably in anticipation, the Railway Ministry will permit private freight trains to connect, directly from dedicated sidings and terminals. Companies such as Tata Steel, Adani Agro, Kribhco, already have their own terminals. Others, that move large tonnages, not particularly suited to road transport or its economics, such as coal, cement, steel, automotive, logistics, grain, chemical, fertiliser and prefabricated sections, have been asking for their own terminals and freight trains. In 2017 itself, 55 additional private freight terminals are to be built at an investment of about Rs. 5,000 crores. Together, these are expected to move 20-25 million tonnes of additional load per annum for a start. Over FY 17 Indian Railways has loaded 1,107 million tonnes of freight by itself, surpassing its targets and setting a record.  Current year targets are set higher still, at 1,200 million tonnes. These private freight trains can either acquire their own specialised rakes and rolling- stock , or, theoretically speaking, rent/lease them from the Indian Railways. Unengaged rolling-stock available with the Indian Railways is usually hard to come by. Therefore, most privates are likely to commission their own. A new Rail Regulator office, along the lines of  the Telecommunication Regulatory Authority Of India (TRAI), is being created to independently recommend freight and passenger tariffs in future. Indian Railways will however manage the operations of these private freight trains on its tracks, on a chargeable basis. This announcement may be hinting that the badly needed dedicated freight corridors which will complement this move, will soon be a reality. The road transport sector meanwhile, has long stolen a march, with lower tariffs and faster down times, particularly for smaller payloads suited to 10 ton trucks and container bearing trailer-trucks. This has, in turn, cut into the overall freight revenue kitty of the Indian Railways, affecting its profitability, and its ability to cross-subsidise passenger fares as of yore. So, this privatisation move in the freight area has not come a moment too soon. The Indian Railways has gargantuan and multiple needs. And despite its impressive usage statistics, is severely cash-strapped. One of India’s biggest employers, and possessed of great professional expertise, it nevertheless needs much out-of-the-box thinking to find solutions and leverage its considerable strengths. After years of systemic stagnation and populist neglect, the Modi government has been making strenuous attempts to revive it. It is historically one of the greatest railway networks in the world, 4^th in size globally, with great military/civilian strategic significance, and future potential throughout the 21^st century. The Union Railway Minister Suresh Prabhu, a technocrat with a reputation for turning around large enterprises, and a penchant for efficiency, has been working hard on all fronts. He has been struggling, from the first, to continue with the policy of cross-subsidising passenger fares, raised, but not enough, with freight revenues. However, with the merging of the Railway Budget with the Union Budget as of this year, finding money for strategic projects is now going to get easier. The menu of needs is indeed long. There is new track being laid, particularly in the North East, modernisation, safety, security, passenger amenities, cleanliness, bio-toilets. New coach and engine factories are being built and old ones refurbished. There is the rapid expansion of digitisation, not just of bookings and responses, but also all internal processes and monitoring system in real-time. Catering is being improved. And, yes, the long awaited dedicated freight corridors are making progress. There is the expensive land acquisition, and the passing muster with environmental and forest laws for the new routes. The first of several bullet trains between Ahmedabad and Mumbai is nearing implementation stage. The Indian Railways, for itself, is also working on private-public partnerships to leverage vast railway real estate and transform railway stations, particularly in tourist and pilgrimage spots. Will there be new private passenger trains anon, perhaps to rival the Raj era ones built for the Maharajahs? And these, alongside modern, purpose-built freight rakes?  The competitive future beckons, and Indian Railways is on its way. (Gautam Mukherjee is a blogger on politics, economics and policy. His twitter handle is @gautammuk) Disclaimer: The opinions, beliefs and views expressed by the various authors and forum participants on this website are personal and do not reflect the opinions, beliefs and views of ABP News Network Pvt Ltd.