Tuesday 11th December 2018

    How the Indian Railways fared in 2017!

    For the first time in the history of independent India, the Railways did not have a separate budget presentation in parliament in 2017. The Rail budget that was a common feature prior to the Union Budget has now been merged with the General Budget. The year 2017 also saw Ministry of Railways under the former union minister Suresh Prabhu create a Vision Document for 2017-19 to bring major reforms in Railway infrastructure, financing of projects, improvement in efficiency of rail networks and overhauling of the organisational set-up. As per the five point formula, Railways will increase throughput on the existing network, build more terminal infrastructure, create innovative fund-raising and sourcing options, and accelerate infrastructure build-out along with build out of a high-speed network. Read On...

    The ministry will increase the construction of rail network from around 7 km per day to 14 km per day through better quality and detailed project management. It will prioritize and fast-track project development of financially viable as well as socially desirable projects through a central Rail Planning and Investment Organization (RPIO)

    It is planned to complete electrification of 4000 km of track in the next 3 years, set up a strong project review mechanism to ensure completion of Eastern and Western Dedicated Freight Corridors (DFC) by 2019 and complete the planning of the new DFCs and commence execution.

    To fund these projects, it has been decided to limit the equity participation of Ministry of Railways to maximum 50% of the project value. PSUs can leverage free reserves and equity to provide funds upfront for undertaking projects. An assured funding of Rs 1.5 lakh crore would be available through LIC, while other similar options will be explored by the government, as per the presentation on Vision Document by the Rail Ministry.

    It is estimated these reforms would throw up an investment opportunity worth Rs 3 lakh crore for not just domestic but global investors and companies operating in the field.

    According to Dewam Modi, an analyst with Equirus Securities, the urban transport & railways segment should be a Rs 3 lakh crore plus opportunity, given the thrust on metros for all towns with a population greater than 1 million. "Railway works on track laying and overhead electrification will take-off given the recent leadership and ministry changes. Works across track laying, signaling, overhead electrification, station development, railway bridges and metros are expected with larger contract awards of around Rs 1,000 crore and more. Railways will also monetize land and opt for PPP concessions to generate additional equity," Devam Modi said.

    Although government has set-up plans for investments where Railways will take equity stake in the infrastructure projects along with participation sought from public sector units, it is expected that private sector capital expenditure in the infrastructure sector is certainly more effective than government or public-sector led initiatives. Private sector PPP participation is seen as critical to raise much-needed capital and create efficient business platforms for the sector.

    Private sector developers and investors are still reeling from balance-sheet overhangs due to policy paralysis and aggressive biddings. Demand has moved slower than most expectations and industry-wide capacity utilization is still at around 71% as per RBI's OBICUS survey. Consequently, we expect PPP models based on low or minimal market risk to work better. Private sector players with balance sheet strength and execution capabilities would participate actively.

    The Year At a Glance:

    New Trains: In 2017, Railways announced the introduction of six new trains across its Tejas Express, Humsafar Express and Antyodaya Express services along with Uday Express. The six new trains will comprise two new trains each in the Tejas, Humsafar and Antyodaya services.

    The Humsafar trains focus on India's middle-class travellers and will be an exclusively three-tiered AC train with optional meals. The Tejas Train, on the other hand, is India's answer to the Bullet train, achieving speeds upto 130 km per hour with quality onboard facilities. The double-decker Uday trains have been introduced with the intention of increasing passenger capacity in railway services on busy routes. These trains will run overnight, connecting major cities across the country. The Antyodaya trains have been announced for the economically backward. These superfast trains, which will have only unreserved coaches, will focus on transporting the common man in a time-bound manner without burning a hole in his pocket.

    Digital Initiative: As part of Prime Minister's Digital India initiative, the Indian Railways also launched free WiFi facilities at 28 stations on the Konkan Railways route. RailTel, a Miniratna enterprise of the Government, focusing on providing broadband and VPN services, in collaboration with Google, aims to provide free WiFi services at 400 stations by 2018. The Indian Railways will be installing CCTV surveillance systems at more than 900 stations across the country. CCTV cameras will be installed on platforms and waiting areas, with control rooms set up so that the RPF personnel can monitor activities by using the Nirbhaya Funds. As of now, there are around 8,000 stations across the country, with 344 stations already covered by CCTV cameras.

    Highest Railway Arch Bridge: To provide direct connectivity to the Kashmir Valley, the Indian Railways launched the main arch of the world's highest bridge on River Chenab in Jammu and Kashmir's Reasi district measuring 359 meters. It is even taller than the Eifel Tower. The 1.3-km-long bridge that forms a crucial link in the 111-km stretch between Katra and Banihal is being constructed at a cost of Rs 1,250 crore. The arch has been designed by consultants from Finland and Germany.


    2017 was not free from glitches as the year saw more than 5 major accidents and derailments that raised issues around usage of outdated technology. To overcome this, the Ministry is planning a near-zero fatality system in the next five years by leveraging technology, upgrading infrastructure and training the workforce. Railways is also evaluating the root causes for the sedate progress in adoption of best in class technology and plan for 5-6 strategic shifts.

    Going ahead, Railways plans to achieve its major reforms by significantly reducing its operational costs across functions. The aim is to reduce operational cost by 10% in 5 years. This will be achieved by reducing the fuel cost by 20% by accelerating electrification and strategic procurement of diesel, and open sourcing of power to ensure reduced per unit costs.

    Hopefully, these measures will usher a happy 2018 for Railways and an enhanced experience for the customers.

    - TradeBriefs Bureau


    Introducing TradeBriefs SME - Print edition - Subscribe Now! | Sample copy